Correlation Between Tenable Holdings and Verint Systems

Can any of the company-specific risk be diversified away by investing in both Tenable Holdings and Verint 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 Verint 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 Verint Systems, you can compare the effects of market volatilities on Tenable Holdings and Verint 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 Verint Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenable Holdings and Verint Systems.

Diversification Opportunities for Tenable Holdings and Verint Systems

0.39

Correlation Coefficient

Tenable Holdings  Verint Systems

Weak diversification

The 3 months correlation between Tenable and Verint is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tenable Holdings and Verint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verint 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 Verint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verint Systems has no effect on the direction of Tenable Holdings i.e., Tenable Holdings and Verint Systems go up and down completely randomly.

Pair Corralation between Tenable Holdings and Verint Systems

Given the investment horizon of 90 days Tenable Holdings is expected to generate 0.62 times more return on investment than Verint Systems. However, Tenable Holdings is 1.61 times less risky than Verint Systems. It trades about 0.02 of its potential returns per unit of risk. Verint Systems is currently generating about -0.02 per unit of risk. If you would invest  4,033  in Tenable Holdings on September 19, 2024 and sell it today you would earn a total of  122.00  from holding Tenable Holdings or generate 3.03% return on investment over 90 days.

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

Tenable Holdings  vs.  Verint Systems

Tenable Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tenable Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tenable Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Verint Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Verint Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Verint Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenable Holdings and Verint Systems

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

The idea behind Tenable Holdings and Verint 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.