Correlation Between Marqeta and Palo Alto

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

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

Diversification Opportunities for Marqeta and Palo Alto

-0.58

Correlation Coefficient

Marqeta  Palo Alto

Excellent diversification

The 3 months correlation between Marqeta and Palo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Marqeta and Palo Alto Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palo Alto Networks and Marqeta 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 Marqeta are associated (or correlated) with Palo Alto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palo Alto Networks has no effect on the direction of Marqeta i.e., Marqeta and Palo Alto go up and down completely randomly.

Pair Corralation between Marqeta and Palo Alto

Allowing for the 90-day total investment horizon Marqeta is expected to under-perform the Palo Alto. In addition to that, Marqeta is 5.25 times more volatile than Palo Alto Networks. It trades about -0.1 of its total potential returns per unit of risk. Palo Alto Networks is currently generating about 0.13 per unit of volatility. If you would invest  36,539  in Palo Alto Networks on August 30, 2024 and sell it today you would earn a total of  1,898  from holding Palo Alto Networks or generate 5.19% return on investment over 90 days.

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

Marqeta  vs.  Palo Alto Networks

Marqeta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marqeta has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Palo Alto Networks

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Palo Alto Networks are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Palo Alto may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Marqeta and Palo Alto

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

The idea behind Marqeta and Palo Alto Networks 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.