Correlation Between Splunk and MongoDB

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

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

Diversification Opportunities for Splunk and MongoDB

0.07

Correlation Coefficient

Splunk  MongoDB

Significant diversification

The 3 months correlation between Splunk and MongoDB is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Splunk Inc and MongoDB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MongoDB and Splunk 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 Splunk Inc are associated (or correlated) with MongoDB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MongoDB has no effect on the direction of Splunk i.e., Splunk and MongoDB go up and down completely randomly.

Pair Corralation between Splunk and MongoDB

If you would invest  29,079  in MongoDB on August 30, 2024 and sell it today you would earn a total of  3,381  from holding MongoDB or generate 11.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Splunk Inc  vs.  MongoDB

Splunk Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Splunk Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Splunk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MongoDB

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MongoDB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, MongoDB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Splunk and MongoDB

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

The idea behind Splunk Inc and MongoDB 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.