Correlation Between Tenable Holdings and Varonis Systems

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

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

Diversification Opportunities for Tenable Holdings and Varonis Systems

0.76

Correlation Coefficient

Tenable Holdings  Varonis Systems

Poor diversification

The 3 months correlation between Tenable and Varonis is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Tenable Holdings and Varonis Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varonis Systems and Tenable 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 Tenable Holdings are associated (or correlated) with Varonis Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varonis Systems has no effect on the direction of Tenable Holdings i.e., Tenable Holdings and Varonis Systems go up and down completely randomly.

Pair Corralation between Tenable Holdings and Varonis Systems

Given the investment horizon of 90 days Tenable Holdings is expected to under-perform the Varonis Systems. But the stock apears to be less risky and, when comparing its historical volatility, Tenable Holdings is 1.04 times less risky than Varonis Systems. The stock trades about -0.06 of its potential returns per unit of risk. The Varonis Systems is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  4,391  in Varonis Systems on December 29, 2024 and sell it today you would lose (222.00) from holding Varonis Systems or give up 5.06% of portfolio value over 90 days.

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

Tenable Holdings  vs.  Varonis Systems

Tenable Holdings

Risk-Adjusted Performance

Very Weak

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

Varonis Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Varonis Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Varonis Systems is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tenable Holdings and Varonis Systems

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

The idea behind Tenable Holdings and Varonis Systems 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.