Correlation Between Riskified and Smartsheet

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

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

Diversification Opportunities for Riskified and Smartsheet

-0.15

Correlation Coefficient

Riskified  Smartsheet

Good diversification

The 3 months correlation between Riskified and Smartsheet is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Riskified and Smartsheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartsheet 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 Smartsheet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartsheet has no effect on the direction of Riskified i.e., Riskified and Smartsheet go up and down completely randomly.

Pair Corralation between Riskified and Smartsheet

Given the investment horizon of 90 days Riskified is expected to generate 6.3 times less return on investment than Smartsheet. In addition to that, Riskified is 2.42 times more volatile than Smartsheet. It trades about 0.01 of its total potential returns per unit of risk. Smartsheet is currently generating about 0.18 per unit of volatility. If you would invest  5,081  in Smartsheet on September 19, 2024 and sell it today you would earn a total of  515.00  from holding Smartsheet or generate 10.14% return on investment over 90 days.

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

Riskified  vs.  Smartsheet

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.

Smartsheet

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smartsheet are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Smartsheet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Riskified and Smartsheet

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

The idea behind Riskified and Smartsheet 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.