Correlation Between New Relic and Rapid7

Can any of the company-specific risk be diversified away by investing in both New Relic and Rapid7 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 New Relic and Rapid7 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Relic and Rapid7 Inc, you can compare the effects of market volatilities on New Relic and Rapid7 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 New Relic with a short position of Rapid7. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Relic and Rapid7.

Diversification Opportunities for New Relic and Rapid7

0.0

Correlation Coefficient

New Relic  Rapid7

Pay attention - limited upside

The 3 months correlation between New and Rapid7 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Relic and Rapid7 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapid7 Inc and New Relic 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 New Relic are associated (or correlated) with Rapid7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapid7 Inc has no effect on the direction of New Relic i.e., New Relic and Rapid7 go up and down completely randomly.

Pair Corralation between New Relic and Rapid7

If you would invest (100.00) in New Relic on December 27, 2024 and sell it today you would earn a total of  100.00  from holding New Relic or generate -100.0% return on investment over 90 days.

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

New Relic  vs.  Rapid7 Inc

New Relic

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Relic has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, New Relic is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Rapid7 Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rapid7 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with New Relic and Rapid7

The main advantage of trading using opposite New Relic and Rapid7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Relic position performs unexpectedly, Rapid7 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 Rapid7 will offset losses from the drop in Rapid7's long position.

The idea behind New Relic and Rapid7 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.