Correlation Between MondayCom and Vimeo

Can any of the company-specific risk be diversified away by investing in both MondayCom and Vimeo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MondayCom and Vimeo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MondayCom and Vimeo Inc, you can compare the effects of market volatilities on MondayCom and Vimeo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MondayCom with a short position of Vimeo. Check out your portfolio center. Please also check ongoing floating volatility patterns of MondayCom and Vimeo.

Diversification Opportunities for MondayCom and Vimeo

-0.3

Correlation Coefficient

MondayCom  Vimeo

Very good diversification

The 3 months correlation between MondayCom and Vimeo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding MondayCom and Vimeo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vimeo Inc and MondayCom is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MondayCom are associated (or correlated) with Vimeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vimeo Inc has no effect on the direction of MondayCom i.e., MondayCom and Vimeo go up and down completely randomly.

Pair Corralation between MondayCom and Vimeo

Given the investment horizon of 90 days MondayCom is expected to generate 0.91 times more return on investment than Vimeo. However, MondayCom is 1.1 times less risky than Vimeo. It trades about 0.13 of its potential returns per unit of risk. Vimeo Inc is currently generating about -0.11 per unit of risk. If you would invest  23,185  in MondayCom on October 23, 2024 and sell it today you would earn a total of  1,409  from holding MondayCom or generate 6.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MondayCom  vs.  Vimeo Inc

MondayCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MondayCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Vimeo Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vimeo Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Vimeo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MondayCom and Vimeo

The main advantage of trading using opposite MondayCom and Vimeo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MondayCom position performs unexpectedly, Vimeo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vimeo will offset losses from the drop in Vimeo's long position.

The idea behind MondayCom and Vimeo Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.