Correlation Between Workiva and MMTEC

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

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

Diversification Opportunities for Workiva and MMTEC

-0.76

Correlation Coefficient

Workiva  MMTEC

Pay attention - limited upside

The 3 months correlation between Workiva and MMTEC is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and MMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMTEC Inc 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 MMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMTEC Inc has no effect on the direction of Workiva i.e., Workiva and MMTEC go up and down completely randomly.

Pair Corralation between Workiva and MMTEC

Allowing for the 90-day total investment horizon Workiva is expected to generate 0.23 times more return on investment than MMTEC. However, Workiva is 4.3 times less risky than MMTEC. It trades about 0.46 of its potential returns per unit of risk. MMTEC Inc is currently generating about -0.16 per unit of risk. If you would invest  7,853  in Workiva on September 27, 2024 and sell it today you would earn a total of  3,463  from holding Workiva or generate 44.1% return on investment over 90 days.

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

Workiva  vs.  MMTEC Inc

Workiva

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 23 (%) 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.

MMTEC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MMTEC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Workiva and MMTEC

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

The idea behind Workiva and MMTEC Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.