Correlation Between Workiva and Aspen Technology

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

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

Diversification Opportunities for Workiva and Aspen Technology

-0.9

Correlation Coefficient

Workiva  Aspen Technology

Pay attention - limited upside

The 3 months correlation between Workiva and Aspen is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen 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 Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Workiva i.e., Workiva and Aspen Technology go up and down completely randomly.

Pair Corralation between Workiva and Aspen Technology

Allowing for the 90-day total investment horizon Workiva is expected to under-perform the Aspen Technology. In addition to that, Workiva is 3.2 times more volatile than Aspen Technology. It trades about -0.16 of its total potential returns per unit of risk. Aspen Technology is currently generating about 0.14 per unit of volatility. If you would invest  24,895  in Aspen Technology on December 28, 2024 and sell it today you would earn a total of  1,538  from holding Aspen Technology or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	83.33%
Values	Daily Returns

Workiva  vs.  Aspen 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Aspen Technology

Risk-Adjusted Performance

OK

Over the last 90 days Aspen Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Workiva and Aspen Technology

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

The idea behind Workiva and Aspen 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.