Correlation Between Sprout Social and Domo

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

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

Diversification Opportunities for Sprout Social and Domo

-0.2

Correlation Coefficient

Sprout Social  Domo

Good diversification

The 3 months correlation between Sprout and Domo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Domo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domo Inc and Sprout Social 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 Sprout Social are associated (or correlated) with Domo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domo Inc has no effect on the direction of Sprout Social i.e., Sprout Social and Domo go up and down completely randomly.

Pair Corralation between Sprout Social and Domo

Considering the 90-day investment horizon Sprout Social is expected to under-perform the Domo. But the stock apears to be less risky and, when comparing its historical volatility, Sprout Social is 1.66 times less risky than Domo. The stock trades about -0.17 of its potential returns per unit of risk. The Domo Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  722.00  in Domo Inc on December 28, 2024 and sell it today you would earn a total of  104.00  from holding Domo Inc or generate 14.4% return on investment over 90 days.

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

Sprout Social  vs.  Domo Inc

Sprout Social

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprout Social has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Domo Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Domo Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Domo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprout Social and Domo

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

The idea behind Sprout Social and Domo Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.