Correlation Between Secureworks Corp and Radware

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

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

Diversification Opportunities for Secureworks Corp and Radware

0.37

Correlation Coefficient

Secureworks Corp  Radware

Weak diversification

The 3 months correlation between Secureworks and Radware is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Secureworks Corp and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware and Secureworks Corp 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 Secureworks Corp are associated (or correlated) with Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Secureworks Corp i.e., Secureworks Corp and Radware go up and down completely randomly.

Pair Corralation between Secureworks Corp and Radware

Given the investment horizon of 90 days Secureworks Corp is expected to generate 1.03 times more return on investment than Radware. However, Secureworks Corp is 1.03 times more volatile than Radware. It trades about 0.06 of its potential returns per unit of risk. Radware is currently generating about 0.05 per unit of risk. If you would invest  787.00  in Secureworks Corp on September 27, 2024 and sell it today you would earn a total of  59.00  from holding Secureworks Corp or generate 7.5% return on investment over 90 days.

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

Secureworks Corp  vs.  Radware

Secureworks Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Secureworks Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Secureworks Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Radware

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Radware may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Secureworks Corp and Radware

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

The idea behind Secureworks Corp and Radware 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.