Correlation Between Freshworks and Blend Labs

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

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

Diversification Opportunities for Freshworks and Blend Labs

0.88

Correlation Coefficient

Freshworks  Blend Labs

Very poor diversification

The 3 months correlation between Freshworks and Blend is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Freshworks and Blend Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blend Labs and Freshworks 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 Freshworks are associated (or correlated) with Blend Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blend Labs has no effect on the direction of Freshworks i.e., Freshworks and Blend Labs go up and down completely randomly.

Pair Corralation between Freshworks and Blend Labs

Given the investment horizon of 90 days Freshworks is expected to generate 1.31 times less return on investment than Blend Labs. In addition to that, Freshworks is 1.49 times more volatile than Blend Labs. It trades about 0.21 of its total potential returns per unit of risk. Blend Labs is currently generating about 0.41 per unit of volatility. If you would invest  361.00  in Blend Labs on September 5, 2024 and sell it today you would earn a total of  168.00  from holding Blend Labs or generate 46.54% return on investment over 90 days.

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

Freshworks  vs.  Blend Labs

Freshworks

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freshworks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Freshworks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Blend Labs

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blend Labs are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Blend Labs exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freshworks and Blend Labs

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

The idea behind Freshworks and Blend Labs 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.