Correlation Between Envestnet and DoubleVerify Holdings

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

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

Diversification Opportunities for Envestnet and DoubleVerify Holdings

0.6

Correlation Coefficient

Envestnet  DoubleVerify Holdings

Poor diversification

The 3 months correlation between Envestnet and DoubleVerify is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Envestnet and DoubleVerify Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleVerify Holdings and Envestnet 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 Envestnet are associated (or correlated) with DoubleVerify Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleVerify Holdings has no effect on the direction of Envestnet i.e., Envestnet and DoubleVerify Holdings go up and down completely randomly.

Pair Corralation between Envestnet and DoubleVerify Holdings

Considering the 90-day investment horizon Envestnet is expected to generate 6.8 times less return on investment than DoubleVerify Holdings. But when comparing it to its historical volatility, Envestnet is 45.46 times less risky than DoubleVerify Holdings. It trades about 0.45 of its potential returns per unit of risk. DoubleVerify Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,928  in DoubleVerify Holdings on September 20, 2024 and sell it today you would earn a total of  41.00  from holding DoubleVerify Holdings or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	22.73%
Values	Daily Returns

Envestnet  vs.  DoubleVerify Holdings

Envestnet

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Envestnet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Envestnet is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

DoubleVerify Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DoubleVerify Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, DoubleVerify Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Envestnet and DoubleVerify Holdings

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

The idea behind Envestnet and DoubleVerify Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.