Correlation Between Riskified and Domo

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

By analyzing existing cross correlation between Riskified and Domo Inc, you can compare the effects of market volatilities on Riskified and Domo 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 Domo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Riskified and Domo.

Diversification Opportunities for Riskified and Domo

0.1

Correlation Coefficient

Riskified  Domo

Average diversification

The 3 months correlation between Riskified and Domo is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Riskified and Domo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domo Inc 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 Domo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domo Inc has no effect on the direction of Riskified i.e., Riskified and Domo go up and down completely randomly.

Pair Corralation between Riskified and Domo

Given the investment horizon of 90 days Riskified is expected to under-perform the Domo. But the stock apears to be less risky and, when comparing its historical volatility, Riskified is 1.65 times less risky than Domo. The stock trades about -0.02 of its potential returns per unit of risk. The Domo Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  702.00  in Domo Inc on September 20, 2024 and sell it today you would earn a total of  67.00  from holding Domo Inc or generate 9.54% return on investment over 90 days.

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

Riskified  vs.  Domo Inc

Riskified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riskified has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Domo Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Domo Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Domo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Riskified and Domo

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

The idea behind Riskified and Domo Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.