Correlation Between Snowflake and MondayCom

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

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

Diversification Opportunities for Snowflake and MondayCom

0.58

Correlation Coefficient

Snowflake  MondayCom

Very weak diversification

The 3 months correlation between Snowflake and MondayCom is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and MondayCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MondayCom and Snowflake 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 Snowflake 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 Snowflake i.e., Snowflake and MondayCom go up and down completely randomly.

Pair Corralation between Snowflake and MondayCom

Given the investment horizon of 90 days Snowflake is expected to generate 142.23 times less return on investment than MondayCom. But when comparing it to its historical volatility, Snowflake is 1.67 times less risky than MondayCom. It trades about 0.0 of its potential returns per unit of risk. MondayCom is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  23,544  in MondayCom on December 31, 2024 and sell it today you would earn a total of  1,157  from holding MondayCom or generate 4.91% return on investment over 90 days.

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

Snowflake  vs.  MondayCom

Snowflake

Risk-Adjusted Performance

Very Weak

Over the last 90 days Snowflake has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Snowflake is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MondayCom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MondayCom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, MondayCom may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Snowflake and MondayCom

The main advantage of trading using opposite Snowflake and MondayCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowflake 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 Snowflake 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.