Correlation Between Workiva and Alkami Technology

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

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

Diversification Opportunities for Workiva and Alkami Technology

0.46

Correlation Coefficient

Workiva  Alkami Technology

Very weak diversification

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

Pair Corralation between Workiva and Alkami Technology

Allowing for the 90-day total investment horizon Workiva is expected to generate 1.23 times more return on investment than Alkami Technology. However, Workiva is 1.23 times more volatile than Alkami Technology. It trades about -0.08 of its potential returns per unit of risk. Alkami Technology is currently generating about -0.2 per unit of risk. If you would invest  9,725  in Workiva on November 28, 2024 and sell it today you would lose (1,376) from holding Workiva or give up 14.15% of portfolio value over 90 days.

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

Workiva  vs.  Alkami Technology

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 quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Alkami Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkami Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Workiva and Alkami Technology

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

The idea behind Workiva and Alkami Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.