Correlation Between Freshworks and Nerdy
Can any of the company-specific risk be diversified away by investing in both Freshworks and Nerdy 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 Freshworks and Nerdy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshworks and Nerdy Inc, you can compare the effects of market volatilities on Freshworks and Nerdy 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 Freshworks with a short position of Nerdy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshworks and Nerdy.
Diversification Opportunities for Freshworks and Nerdy
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Freshworks and Nerdy is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Freshworks and Nerdy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nerdy Inc and Freshworks 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 Freshworks are associated (or correlated) with Nerdy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nerdy Inc has no effect on the direction of Freshworks i.e., Freshworks and Nerdy go up and down completely randomly.
Pair Corralation between Freshworks and Nerdy
Given the investment horizon of 90 days Freshworks is expected to generate 1.19 times less return on investment than Nerdy. But when comparing it to its historical volatility, Freshworks is 2.1 times less risky than Nerdy. It trades about 0.07 of its potential returns per unit of risk. Nerdy Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 159.00 in Nerdy Inc on August 31, 2024 and sell it today you would lose (1.00) from holding Nerdy Inc or give up 0.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshworks vs. Nerdy Inc
Performance |
| Timeline |
| Freshworks |
| Nerdy Inc |
Freshworks and Nerdy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshworks and Nerdy
The main advantage of trading using opposite Freshworks and Nerdy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshworks position performs unexpectedly, Nerdy 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 Nerdy will offset losses from the drop in Nerdy's long position.| Freshworks vs. Braze Inc | Freshworks vs. Enfusion | Freshworks vs. Clearwater Analytics Holdings | Freshworks vs. CS Disco LLC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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