Correlation Between Workday and Indie Semiconductor

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

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

Diversification Opportunities for Workday and Indie Semiconductor

0.67

Correlation Coefficient

Workday  Indie Semiconductor

Poor diversification

The 3 months correlation between Workday and Indie is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Workday and indie Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on indie Semiconductor and Workday 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 Workday are associated (or correlated) with Indie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of indie Semiconductor has no effect on the direction of Workday i.e., Workday and Indie Semiconductor go up and down completely randomly.

Pair Corralation between Workday and Indie Semiconductor

Given the investment horizon of 90 days Workday is expected to generate 7.32 times less return on investment than Indie Semiconductor. But when comparing it to its historical volatility, Workday is 5.78 times less risky than Indie Semiconductor. It trades about 0.13 of its potential returns per unit of risk. indie Semiconductor is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  361.00  in indie Semiconductor on August 31, 2024 and sell it today you would earn a total of  142.00  from holding indie Semiconductor or generate 39.34% return on investment over 90 days.

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

Workday  vs.  indie Semiconductor

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 current stock price disturbance, may contribute to short-term losses for the investors.

indie Semiconductor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Workday and Indie Semiconductor

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

The idea behind Workday and indie Semiconductor 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.