Correlation Between Cognyte Software and SimilarWeb

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

By analyzing existing cross correlation between Cognyte Software and SimilarWeb, you can compare the effects of market volatilities on Cognyte Software and SimilarWeb 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 Cognyte Software with a short position of SimilarWeb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognyte Software and SimilarWeb.

Diversification Opportunities for Cognyte Software and SimilarWeb

0.91

Correlation Coefficient

Cognyte Software  SimilarWeb

Almost no diversification

The 3 months correlation between Cognyte and SimilarWeb is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cognyte Software and SimilarWeb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SimilarWeb and Cognyte Software 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 Cognyte Software are associated (or correlated) with SimilarWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SimilarWeb has no effect on the direction of Cognyte Software i.e., Cognyte Software and SimilarWeb go up and down completely randomly.

Pair Corralation between Cognyte Software and SimilarWeb

Given the investment horizon of 90 days Cognyte Software is expected to generate 1.4 times less return on investment than SimilarWeb. In addition to that, Cognyte Software is 1.14 times more volatile than SimilarWeb. It trades about 0.14 of its total potential returns per unit of risk. SimilarWeb is currently generating about 0.22 per unit of volatility. If you would invest  1,280  in SimilarWeb on September 26, 2024 and sell it today you would earn a total of  186.00  from holding SimilarWeb or generate 14.53% return on investment over 90 days.

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

Cognyte Software  vs.  SimilarWeb

Cognyte Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cognyte Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cognyte Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

SimilarWeb

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SimilarWeb are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SimilarWeb sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cognyte Software and SimilarWeb

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

The idea behind Cognyte Software and SimilarWeb 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.