Correlation Between Expensify and PROS Holdings

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

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

Diversification Opportunities for Expensify and PROS Holdings

0.84

Correlation Coefficient

Expensify  PROS Holdings

Very poor diversification

The 3 months correlation between Expensify and PROS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Expensify and PROS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROS Holdings and Expensify 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 Expensify are associated (or correlated) with PROS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROS Holdings has no effect on the direction of Expensify i.e., Expensify and PROS Holdings go up and down completely randomly.

Pair Corralation between Expensify and PROS Holdings

Given the investment horizon of 90 days Expensify is expected to generate 1.3 times more return on investment than PROS Holdings. However, Expensify is 1.3 times more volatile than PROS Holdings. It trades about 0.2 of its potential returns per unit of risk. PROS Holdings is currently generating about 0.15 per unit of risk. If you would invest  225.00  in Expensify on September 15, 2024 and sell it today you would earn a total of  162.00  from holding Expensify or generate 72.0% return on investment over 90 days.

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

Expensify  vs.  PROS Holdings

Expensify

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Expensify are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Expensify showed solid returns over the last few months and may actually be approaching a breakup point.

PROS Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PROS Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, PROS Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Expensify and PROS Holdings

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

The idea behind Expensify and PROS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.