Correlation Between Atlassian Corp and Workday

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

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

Diversification Opportunities for Atlassian Corp and Workday

0.52

Correlation Coefficient

Atlassian Corp  Workday

Very weak diversification

The 3 months correlation between Atlassian and Workday is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Atlassian Corp Plc and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday and Atlassian 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 Atlassian Corp Plc are associated (or correlated) with Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Atlassian Corp i.e., Atlassian Corp and Workday go up and down completely randomly.

Pair Corralation between Atlassian Corp and Workday

Given the investment horizon of 90 days Atlassian Corp Plc is expected to generate 1.8 times more return on investment than Workday. However, Atlassian Corp is 1.8 times more volatile than Workday. It trades about 0.26 of its potential returns per unit of risk. Workday is currently generating about -0.03 per unit of risk. If you would invest  16,380  in Atlassian Corp Plc on September 1, 2024 and sell it today you would earn a total of  9,978  from holding Atlassian Corp Plc or generate 60.92% return on investment over 90 days.

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

Atlassian Corp Plc  vs.  Workday

Atlassian Corp Plc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Atlassian Corp Plc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Atlassian Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Workday

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Workday is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Atlassian Corp and Workday

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

The idea behind Atlassian Corp Plc and Workday 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.