Correlation Between Progress Software and Alkami Technology

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Can any of the company-specific risk be diversified away by investing in both Progress Software and Alkami Technology 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 Progress Software and Alkami Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progress Software and Alkami Technology, you can compare the effects of market volatilities on Progress Software and Alkami Technology 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 Progress Software with a short position of Alkami Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progress Software and Alkami Technology.

Diversification Opportunities for Progress Software and Alkami Technology

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Progress and Alkami is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Progress Software and Alkami Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkami Technology and Progress Software 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 Progress Software are associated (or correlated) with Alkami Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkami Technology has no effect on the direction of Progress Software i.e., Progress Software and Alkami Technology go up and down completely randomly.

Pair Corralation between Progress Software and Alkami Technology

Given the investment horizon of 90 days Progress Software is expected to generate 1.57 times less return on investment than Alkami Technology. But when comparing it to its historical volatility, Progress Software is 1.37 times less risky than Alkami Technology. It trades about 0.16 of its potential returns per unit of risk. Alkami Technology is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,962  in Alkami Technology on September 12, 2024 and sell it today you would earn a total of  1,009  from holding Alkami Technology or generate 34.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Progress Software  vs.  Alkami Technology

 Performance 
       Timeline  
Progress Software 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Progress Software are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Progress Software unveiled solid returns over the last few months and may actually be approaching a breakup point.
Alkami Technology 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Alkami Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Alkami Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Progress Software and Alkami Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Progress Software and Alkami Technology

The main advantage of trading using opposite Progress Software and Alkami Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progress Software position performs unexpectedly, Alkami Technology 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 Alkami Technology will offset losses from the drop in Alkami Technology's long position.
The idea behind Progress Software and Alkami Technology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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