Correlation Between Workday and Logility

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

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

Diversification Opportunities for Workday and Logility

0.61

Correlation Coefficient

Workday  Logility

Poor diversification

The 3 months correlation between Workday and Logility is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Logility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility and Workday 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 Workday are associated (or correlated) with Logility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility has no effect on the direction of Workday i.e., Workday and Logility go up and down completely randomly.

Pair Corralation between Workday and Logility

Given the investment horizon of 90 days Workday is expected to generate 1.4 times less return on investment than Logility. But when comparing it to its historical volatility, Workday is 1.14 times less risky than Logility. It trades about 0.01 of its potential returns per unit of risk. Logility is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,080  in Logility on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Logility or generate 0.09% return on investment over 90 days.

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

Workday  vs.  Logility

Workday

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Workday may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Logility

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Logility are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Logility is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Workday and Logility

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

The idea behind Workday and Logility 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.