Correlation Between Progress Software and Model N

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

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

Diversification Opportunities for Progress Software and Model N

0.64

Correlation Coefficient

Progress Software  Model N

Poor diversification

The 3 months correlation between Progress and Model is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Progress Software and Model N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Model N and Progress 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 Progress Software are associated (or correlated) with Model N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Model N has no effect on the direction of Progress Software i.e., Progress Software and Model N go up and down completely randomly.

Pair Corralation between Progress Software and Model N

If you would invest  6,468  in Progress Software on August 31, 2024 and sell it today you would earn a total of  368.00  from holding Progress Software or generate 5.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.35%
Values	Daily Returns

Progress Software  vs.  Model N

Progress Software

Risk-Adjusted Performance

10 of 100

OK

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

Model N

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Model N has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Model N is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Progress Software and Model N

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

The idea behind Progress Software and Model N 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 Stocks Directory module to find actively traded stocks across global markets.