Correlation Between MondayCom and Domo
Can any of the company-specific risk be diversified away by investing in both MondayCom and Domo 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 MondayCom and Domo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MondayCom and Domo Inc, you can compare the effects of market volatilities on MondayCom and Domo 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 MondayCom with a short position of Domo. Check out your portfolio center. Please also check ongoing floating volatility patterns of MondayCom and Domo.
Diversification Opportunities for MondayCom and Domo
Poor diversification
The 3 months correlation between MondayCom and Domo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MondayCom and Domo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domo Inc and MondayCom 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 MondayCom are associated (or correlated) with Domo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domo Inc has no effect on the direction of MondayCom i.e., MondayCom and Domo go up and down completely randomly.
Pair Corralation between MondayCom and Domo
Given the investment horizon of 90 days MondayCom is expected to under-perform the Domo. But the stock apears to be less risky and, when comparing its historical volatility, MondayCom is 1.41 times less risky than Domo. The stock trades about -0.39 of its potential returns per unit of risk. The Domo Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 880.00 in Domo Inc on December 13, 2024 and sell it today you would lose (59.00) from holding Domo Inc or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MondayCom vs. Domo Inc
Performance |
| Timeline |
| MondayCom |
| Domo Inc |
MondayCom and Domo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MondayCom and Domo
The main advantage of trading using opposite MondayCom and Domo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MondayCom position performs unexpectedly, Domo 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 Domo will offset losses from the drop in Domo's long position.| MondayCom vs. Datadog | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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