Correlation Between Workiva and Progyny

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

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

Diversification Opportunities for Workiva and Progyny

-0.59

Correlation Coefficient

Workiva  Progyny

Excellent diversification

The 3 months correlation between Workiva and Progyny is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Progyny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progyny and Workiva 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 Workiva are associated (or correlated) with Progyny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progyny has no effect on the direction of Workiva i.e., Workiva and Progyny go up and down completely randomly.

Pair Corralation between Workiva and Progyny

Allowing for the 90-day total investment horizon Workiva is expected to generate 0.37 times more return on investment than Progyny. However, Workiva is 2.71 times less risky than Progyny. It trades about 0.22 of its potential returns per unit of risk. Progyny is currently generating about -0.09 per unit of risk. If you would invest  7,481  in Workiva on September 3, 2024 and sell it today you would earn a total of  2,244  from holding Workiva or generate 30.0% return on investment over 90 days.

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

Workiva  vs.  Progyny

Workiva

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Workiva disclosed solid returns over the last few months and may actually be approaching a breakup point.

Progyny

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progyny has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Workiva and Progyny

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

The idea behind Workiva and Progyny 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.