Correlation Between MARKET VECTR and Workiva

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

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

Diversification Opportunities for MARKET VECTR and Workiva

0.3

Correlation Coefficient

MARKET VECTR  Workiva

Weak diversification

The 3 months correlation between MARKET and Workiva is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MARKET VECTR RETAIL and Workiva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workiva and MARKET VECTR 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 MARKET VECTR RETAIL are associated (or correlated) with Workiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workiva has no effect on the direction of MARKET VECTR i.e., MARKET VECTR and Workiva go up and down completely randomly.

Pair Corralation between MARKET VECTR and Workiva

Assuming the 90 days trading horizon MARKET VECTR RETAIL is expected to generate 0.28 times more return on investment than Workiva. However, MARKET VECTR RETAIL is 3.55 times less risky than Workiva. It trades about -0.11 of its potential returns per unit of risk. Workiva is currently generating about -0.16 per unit of risk. If you would invest  21,695  in MARKET VECTR RETAIL on December 22, 2024 and sell it today you would lose (1,215) from holding MARKET VECTR RETAIL or give up 5.6% of portfolio value over 90 days.

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

MARKET VECTR RETAIL  vs.  Workiva

MARKET VECTR RETAIL

Risk-Adjusted Performance

Very Weak

Over the last 90 days MARKET VECTR RETAIL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MARKET VECTR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Workiva

Risk-Adjusted Performance

Very Weak

Over the last 90 days Workiva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MARKET VECTR and Workiva

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

The idea behind MARKET VECTR RETAIL and Workiva 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.