Correlation Between Verint Systems and Priority Technology

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

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

Diversification Opportunities for Verint Systems and Priority Technology

0.73

Correlation Coefficient

Verint Systems  Priority Technology

Poor diversification

The 3 months correlation between Verint and Priority is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Verint Systems and Priority Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Priority Technology and Verint Systems 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 Verint Systems are associated (or correlated) with Priority Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Priority Technology has no effect on the direction of Verint Systems i.e., Verint Systems and Priority Technology go up and down completely randomly.

Pair Corralation between Verint Systems and Priority Technology

Given the investment horizon of 90 days Verint Systems is expected to generate 1.15 times more return on investment than Priority Technology. However, Verint Systems is 1.15 times more volatile than Priority Technology Holdings. It trades about 0.09 of its potential returns per unit of risk. Priority Technology Holdings is currently generating about 0.01 per unit of risk. If you would invest  2,482  in Verint Systems on September 24, 2024 and sell it today you would earn a total of  205.00  from holding Verint Systems or generate 8.26% return on investment over 90 days.

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

Verint Systems  vs.  Priority Technology Holdings

Verint Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Verint Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Verint Systems may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Priority Technology

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Priority Technology Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Priority Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verint Systems and Priority Technology

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

The idea behind Verint Systems and Priority Technology Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.