Correlation Between Tenable Holdings and Zscaler

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

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

Diversification Opportunities for Tenable Holdings and Zscaler

0.71

Correlation Coefficient

Tenable Holdings  Zscaler

Poor diversification

The 3 months correlation between Tenable and Zscaler is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tenable Holdings and Zscaler in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zscaler 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 Zscaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zscaler has no effect on the direction of Tenable Holdings i.e., Tenable Holdings and Zscaler go up and down completely randomly.

Pair Corralation between Tenable Holdings and Zscaler

Given the investment horizon of 90 days Tenable Holdings is expected to generate 2.03 times less return on investment than Zscaler. But when comparing it to its historical volatility, Tenable Holdings is 1.26 times less risky than Zscaler. It trades about 0.03 of its potential returns per unit of risk. Zscaler is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  17,479  in Zscaler on September 21, 2024 and sell it today you would earn a total of  842.00  from holding Zscaler or generate 4.82% return on investment over 90 days.

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

Tenable Holdings  vs.  Zscaler

Tenable Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tenable Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Zscaler

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Tenable Holdings and Zscaler

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

The idea behind Tenable Holdings and Zscaler 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 Transaction History module to view history of all your transactions and understand their impact on performance.