Correlation Between Sprout Social and Riskified

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

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

Diversification Opportunities for Sprout Social and Riskified

0.09

Correlation Coefficient

Sprout Social  Riskified

Significant diversification

The 3 months correlation between Sprout and Riskified is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Riskified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riskified 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 Riskified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riskified has no effect on the direction of Sprout Social i.e., Sprout Social and Riskified go up and down completely randomly.

Pair Corralation between Sprout Social and Riskified

Considering the 90-day investment horizon Sprout Social is expected to under-perform the Riskified. In addition to that, Sprout Social is 1.24 times more volatile than Riskified. It trades about -0.1 of its total potential returns per unit of risk. Riskified is currently generating about 0.07 per unit of volatility. If you would invest  485.00  in Riskified on November 28, 2024 and sell it today you would earn a total of  35.00  from holding Riskified or generate 7.22% return on investment over 90 days.

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

Sprout Social  vs.  Riskified

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Riskified

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Riskified are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Riskified may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Sprout Social and Riskified

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

The idea behind Sprout Social and Riskified 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..