Correlation Between Tenable Holdings and Rackspace Technology

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

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

Diversification Opportunities for Tenable Holdings and Rackspace Technology

0.52

Correlation Coefficient

Tenable Holdings  Rackspace Technology

Very weak diversification

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

Pair Corralation between Tenable Holdings and Rackspace Technology

Given the investment horizon of 90 days Tenable Holdings is expected to generate 0.44 times more return on investment than Rackspace Technology. However, Tenable Holdings is 2.28 times less risky than Rackspace Technology. It trades about 0.0 of its potential returns per unit of risk. Rackspace Technology is currently generating about -0.01 per unit of risk. If you would invest  4,028  in Tenable Holdings on September 19, 2024 and sell it today you would lose (28.00) from holding Tenable Holdings or give up 0.7% of portfolio value over 90 days.

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

Tenable Holdings  vs.  Rackspace Technology

Tenable Holdings

Risk-Adjusted Performance

0 of 100

Weak

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

Rackspace Technology

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Rackspace Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Rackspace Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tenable Holdings and Rackspace Technology

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

The idea behind Tenable Holdings and Rackspace Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.