Correlation Between Workiva and Rumble

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

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

Diversification Opportunities for Workiva and Rumble

0.85

Correlation Coefficient

Workiva  Rumble

Very poor diversification

The 3 months correlation between Workiva and Rumble is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble 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 Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of Workiva i.e., Workiva and Rumble go up and down completely randomly.

Pair Corralation between Workiva and Rumble

Allowing for the 90-day total investment horizon Workiva is expected to generate 2.93 times less return on investment than Rumble. But when comparing it to its historical volatility, Workiva is 3.27 times less risky than Rumble. It trades about 0.22 of its potential returns per unit of risk. Rumble Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Rumble Inc on September 3, 2024 and sell it today you would earn a total of  113.00  from holding Rumble Inc or generate 96.58% return on investment over 90 days.

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

Workiva  vs.  Rumble Inc

Workiva

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 17 (%) 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.

Rumble Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rumble Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Rumble showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Workiva and Rumble

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

The idea behind Workiva and Rumble 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 Transaction History module to view history of all your transactions and understand their impact on performance.