Correlation Between Domo and Bill
Can any of the company-specific risk be diversified away by investing in both Domo and Bill 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 Domo and Bill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Domo Inc and Bill Com Holdings, you can compare the effects of market volatilities on Domo and Bill 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 Domo with a short position of Bill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Domo and Bill.
Diversification Opportunities for Domo and Bill
Very poor diversification
The 3 months correlation between Domo and Bill is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Domo Inc and Bill Com Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bill Com Holdings and Domo 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 Domo Inc are associated (or correlated) with Bill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bill Com Holdings has no effect on the direction of Domo i.e., Domo and Bill go up and down completely randomly.
Pair Corralation between Domo and Bill
Given the investment horizon of 90 days Domo is expected to generate 3.1 times less return on investment than Bill. But when comparing it to its historical volatility, Domo Inc is 1.65 times less risky than Bill. It trades about 0.27 of its potential returns per unit of risk. Bill Com Holdings is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 5,669 in Bill Com Holdings on August 27, 2024 and sell it today you would earn a total of 3,482 from holding Bill Com Holdings or generate 61.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Domo Inc vs. Bill Com Holdings
Performance |
| Timeline |
| Domo Inc |
| Bill Com Holdings |
Domo and Bill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Domo and Bill
The main advantage of trading using opposite Domo and Bill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Domo position performs unexpectedly, Bill 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 Bill will offset losses from the drop in Bill's long position.The idea behind Domo Inc and Bill Com Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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