Correlation Between Progyny and Sprout Social

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

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

Diversification Opportunities for Progyny and Sprout Social

-0.28

Correlation Coefficient

Progyny  Sprout Social

Very good diversification

The 3 months correlation between Progyny and Sprout is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Progyny and Sprout Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprout Social and Progyny 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 Progyny are associated (or correlated) with Sprout Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprout Social has no effect on the direction of Progyny i.e., Progyny and Sprout Social go up and down completely randomly.

Pair Corralation between Progyny and Sprout Social

Given the investment horizon of 90 days Progyny is expected to generate 1.45 times more return on investment than Sprout Social. However, Progyny is 1.45 times more volatile than Sprout Social. It trades about 0.24 of its potential returns per unit of risk. Sprout Social is currently generating about -0.06 per unit of risk. If you would invest  1,488  in Progyny on October 5, 2024 and sell it today you would earn a total of  285.00  from holding Progyny or generate 19.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Progyny  vs.  Sprout Social

Progyny

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Progyny are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Progyny showed solid returns over the last few months and may actually be approaching a breakup point.

Sprout Social

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprout Social are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sprout Social may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Progyny and Sprout Social

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

The idea behind Progyny and Sprout Social 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.