Correlation Between Workday and NCR Atleos

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

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

Diversification Opportunities for Workday and NCR Atleos

0.46

Correlation Coefficient

Workday  NCR Atleos

Very weak diversification

The 3 months correlation between Workday and NCR is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Workday and NCR Atleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCR Atleos 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 NCR Atleos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCR Atleos has no effect on the direction of Workday i.e., Workday and NCR Atleos go up and down completely randomly.

Pair Corralation between Workday and NCR Atleos

Given the investment horizon of 90 days Workday is expected to generate 1.0 times more return on investment than NCR Atleos. However, Workday is 1.0 times less risky than NCR Atleos. It trades about -0.04 of its potential returns per unit of risk. NCR Atleos is currently generating about -0.11 per unit of risk. If you would invest  26,683  in Workday on December 19, 2024 and sell it today you would lose (1,492) from holding Workday or give up 5.59% of portfolio value over 90 days.

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

Workday  vs.  NCR Atleos

Workday

Risk-Adjusted Performance

Very Weak

Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Workday is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

NCR Atleos

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCR Atleos has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Workday and NCR Atleos

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

The idea behind Workday and NCR Atleos 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.