Correlation Between Riskified and Cognyte Software

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

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

Diversification Opportunities for Riskified and Cognyte Software

0.71

Correlation Coefficient

Riskified  Cognyte Software

Poor diversification

The 3 months correlation between Riskified and Cognyte is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Riskified and Cognyte Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognyte Software and Riskified 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 Riskified are associated (or correlated) with Cognyte Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognyte Software has no effect on the direction of Riskified i.e., Riskified and Cognyte Software go up and down completely randomly.

Pair Corralation between Riskified and Cognyte Software

Given the investment horizon of 90 days Riskified is expected to under-perform the Cognyte Software. In addition to that, Riskified is 1.01 times more volatile than Cognyte Software. It trades about -0.06 of its total potential returns per unit of risk. Cognyte Software is currently generating about 0.05 per unit of volatility. If you would invest  764.00  in Cognyte Software on September 26, 2024 and sell it today you would earn a total of  107.00  from holding Cognyte Software or generate 14.01% return on investment over 90 days.

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

Riskified  vs.  Cognyte Software

Riskified

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Riskified are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, Riskified is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Riskified and Cognyte Software

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

The idea behind Riskified and Cognyte Software 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.