Correlation Between Nice and Verint Systems

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

By analyzing existing cross correlation between Nice Ltd ADR and Verint Systems, you can compare the effects of market volatilities on Nice and Verint Systems 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 Verint Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice and Verint Systems.

Diversification Opportunities for Nice and Verint Systems

0.85

Correlation Coefficient

Nice  Verint Systems

Very poor diversification

The 3 months correlation between Nice and Verint is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nice Ltd ADR and Verint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verint Systems 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 Ltd ADR are associated (or correlated) with Verint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verint Systems has no effect on the direction of Nice i.e., Nice and Verint Systems go up and down completely randomly.

Pair Corralation between Nice and Verint Systems

Given the investment horizon of 90 days Nice Ltd ADR is expected to generate 1.06 times more return on investment than Verint Systems. However, Nice is 1.06 times more volatile than Verint Systems. It trades about -0.04 of its potential returns per unit of risk. Verint Systems is currently generating about -0.23 per unit of risk. If you would invest  17,052  in Nice Ltd ADR on December 28, 2024 and sell it today you would lose (1,546) from holding Nice Ltd ADR or give up 9.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Nice Ltd ADR  vs.  Verint Systems

Nice Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nice Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Verint Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Verint Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nice and Verint Systems

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

The idea behind Nice Ltd ADR and Verint Systems 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.