Correlation Between Model N and ProStar Holdings

Can any of the company-specific risk be diversified away by investing in both Model N and ProStar Holdings 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 Model N and ProStar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Model N and ProStar Holdings, you can compare the effects of market volatilities on Model N and ProStar Holdings 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 Model N with a short position of ProStar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Model N and ProStar Holdings.

Diversification Opportunities for Model N and ProStar Holdings

0.0

Correlation Coefficient

Model N  ProStar Holdings

Pay attention - limited upside

The 3 months correlation between Model and ProStar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Model N and ProStar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProStar Holdings and Model N 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 Model N are associated (or correlated) with ProStar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProStar Holdings has no effect on the direction of Model N i.e., Model N and ProStar Holdings go up and down completely randomly.

Pair Corralation between Model N and ProStar Holdings

If you would invest  8.00  in ProStar Holdings on December 29, 2024 and sell it today you would earn a total of  0.03  from holding ProStar Holdings or generate 0.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Model N  vs.  ProStar Holdings

Model N

Risk-Adjusted Performance

Very Weak

Over the last 90 days Model N has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Model N is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ProStar Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProStar Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ProStar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Model N and ProStar Holdings

The main advantage of trading using opposite Model N and ProStar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Model N position performs unexpectedly, ProStar Holdings 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 ProStar Holdings will offset losses from the drop in ProStar Holdings' long position.

The idea behind Model N and ProStar Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..