Correlation Between Workiva and INTERSHOP Communications

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

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

Diversification Opportunities for Workiva and INTERSHOP Communications

0.34

Correlation Coefficient

Workiva  INTERSHOP Communications

Weak diversification

The 3 months correlation between Workiva and INTERSHOP is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and INTERSHOP Communications Aktie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERSHOP Communications 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 INTERSHOP Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERSHOP Communications has no effect on the direction of Workiva i.e., Workiva and INTERSHOP Communications go up and down completely randomly.

Pair Corralation between Workiva and INTERSHOP Communications

Assuming the 90 days trading horizon Workiva is expected to generate 0.94 times more return on investment than INTERSHOP Communications. However, Workiva is 1.07 times less risky than INTERSHOP Communications. It trades about 0.28 of its potential returns per unit of risk. INTERSHOP Communications Aktiengesellschaft is currently generating about -0.23 per unit of risk. If you would invest  9,250  in Workiva on September 26, 2024 and sell it today you would earn a total of  1,350  from holding Workiva or generate 14.59% return on investment over 90 days.

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

Workiva  vs.  INTERSHOP Communications Aktie

Workiva

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Workiva reported solid returns over the last few months and may actually be approaching a breakup point.

INTERSHOP Communications

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTERSHOP Communications Aktiengesellschaft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, INTERSHOP Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Workiva and INTERSHOP Communications

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

The idea behind Workiva and INTERSHOP Communications Aktiengesellschaft 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.