Correlation Between Nice and WhiteSmoke Software

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

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

Diversification Opportunities for Nice and WhiteSmoke Software

0.4

Correlation Coefficient

Nice  WhiteSmoke Software

Very weak diversification

The 3 months correlation between Nice and WhiteSmoke is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nice and WhiteSmoke Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WhiteSmoke Software and Nice 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 Nice are associated (or correlated) with WhiteSmoke Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WhiteSmoke Software has no effect on the direction of Nice i.e., Nice and WhiteSmoke Software go up and down completely randomly.

Pair Corralation between Nice and WhiteSmoke Software

Assuming the 90 days trading horizon Nice is expected to under-perform the WhiteSmoke Software. But the stock apears to be less risky and, when comparing its historical volatility, Nice is 1.4 times less risky than WhiteSmoke Software. The stock trades about -0.09 of its potential returns per unit of risk. The WhiteSmoke Software is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  40,000  in WhiteSmoke Software on November 28, 2024 and sell it today you would lose (2,900) from holding WhiteSmoke Software or give up 7.25% of portfolio value over 90 days.

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

Nice  vs.  WhiteSmoke Software

Nice

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nice has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

WhiteSmoke Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days WhiteSmoke Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WhiteSmoke Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nice and WhiteSmoke Software

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

The idea behind Nice and WhiteSmoke Software 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.