Correlation Between Riskified and MondayCom

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

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

Diversification Opportunities for Riskified and MondayCom

0.04

Correlation Coefficient

Riskified  MondayCom

Significant diversification

The 3 months correlation between Riskified and MondayCom is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Riskified and MondayCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MondayCom and Riskified 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 Riskified are associated (or correlated) with MondayCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MondayCom has no effect on the direction of Riskified i.e., Riskified and MondayCom go up and down completely randomly.

Pair Corralation between Riskified and MondayCom

Given the investment horizon of 90 days Riskified is expected to generate 0.47 times more return on investment than MondayCom. However, Riskified is 2.15 times less risky than MondayCom. It trades about -0.02 of its potential returns per unit of risk. MondayCom is currently generating about -0.17 per unit of risk. If you would invest  470.00  in Riskified on September 23, 2024 and sell it today you would lose (6.00) from holding Riskified or give up 1.28% of portfolio value over 90 days.

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

Riskified  vs.  MondayCom

Riskified

Risk-Adjusted Performance

0 of 100

Very Weak

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

MondayCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MondayCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Riskified and MondayCom

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

The idea behind Riskified and MondayCom 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.