Correlation Between Five9 and Confluent
Can any of the company-specific risk be diversified away by investing in both Five9 and Confluent 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 Five9 and Confluent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five9 Inc and Confluent, you can compare the effects of market volatilities on Five9 and Confluent 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 Five9 with a short position of Confluent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five9 and Confluent.
Diversification Opportunities for Five9 and Confluent
Very poor diversification
The 3 months correlation between Five9 and Confluent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Five9 Inc and Confluent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Confluent and Five9 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 Five9 Inc are associated (or correlated) with Confluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Confluent has no effect on the direction of Five9 i.e., Five9 and Confluent go up and down completely randomly.
Pair Corralation between Five9 and Confluent
Given the investment horizon of 90 days Five9 is expected to generate 1.08 times less return on investment than Confluent. But when comparing it to its historical volatility, Five9 Inc is 1.02 times less risky than Confluent. It trades about 0.41 of its potential returns per unit of risk. Confluent is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 2,260 in Confluent on August 27, 2024 and sell it today you would earn a total of 892.00 from holding Confluent or generate 39.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five9 Inc vs. Confluent
Performance |
| Timeline |
| Five9 Inc |
| Confluent |
Five9 and Confluent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five9 and Confluent
The main advantage of trading using opposite Five9 and Confluent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five9 position performs unexpectedly, Confluent 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 Confluent will offset losses from the drop in Confluent's long position.The idea behind Five9 Inc and Confluent 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.| Confluent vs. DigitalOcean Holdings | Confluent vs. Doximity | Confluent vs. Gitlab Inc | Confluent vs. Global E Online |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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