Correlation Between Workiva and Cuentas

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

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

Diversification Opportunities for Workiva and Cuentas

-0.46

Correlation Coefficient

Workiva  Cuentas

Very good diversification

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

Pair Corralation between Workiva and Cuentas

Allowing for the 90-day total investment horizon Workiva is expected to generate 10.59 times less return on investment than Cuentas. But when comparing it to its historical volatility, Workiva is 2.21 times less risky than Cuentas. It trades about 0.01 of its potential returns per unit of risk. Cuentas is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  487.00  in Cuentas on October 24, 2024 and sell it today you would earn a total of  26.00  from holding Cuentas or generate 5.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	8.76%
Values	Daily Returns

Workiva  vs.  Cuentas

Workiva

Risk-Adjusted Performance

12 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Workiva disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cuentas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuentas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Cuentas is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Workiva and Cuentas

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

The idea behind Workiva and Cuentas 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.