Correlation Between Powerschool Holdings and Jfrog

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

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

Diversification Opportunities for Powerschool Holdings and Jfrog

0.73

Correlation Coefficient

Powerschool Holdings  Jfrog

Poor diversification

The 3 months correlation between Powerschool and Jfrog is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Powerschool Holdings and Jfrog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jfrog and Powerschool Holdings 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 Powerschool Holdings are associated (or correlated) with Jfrog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jfrog has no effect on the direction of Powerschool Holdings i.e., Powerschool Holdings and Jfrog go up and down completely randomly.

Pair Corralation between Powerschool Holdings and Jfrog

Given the investment horizon of 90 days Powerschool Holdings is expected to generate 0.04 times more return on investment than Jfrog. However, Powerschool Holdings is 25.01 times less risky than Jfrog. It trades about 0.22 of its potential returns per unit of risk. Jfrog is currently generating about 0.0 per unit of risk. If you would invest  2,233  in Powerschool Holdings on September 21, 2024 and sell it today you would earn a total of  48.00  from holding Powerschool Holdings or generate 2.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	56.35%
Values	Daily Returns

Powerschool Holdings  vs.  Jfrog

Powerschool Holdings

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Powerschool Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Powerschool Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Jfrog

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Powerschool Holdings and Jfrog

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

The idea behind Powerschool Holdings and Jfrog 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.