Correlation Between Marqeta and Five9
Can any of the company-specific risk be diversified away by investing in both Marqeta and Five9 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 Marqeta and Five9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marqeta and Five9 Inc, you can compare the effects of market volatilities on Marqeta and Five9 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 Marqeta with a short position of Five9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marqeta and Five9.
Diversification Opportunities for Marqeta and Five9
Average diversification
The 3 months correlation between Marqeta and Five9 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Marqeta and Five9 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five9 Inc and Marqeta 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 Marqeta are associated (or correlated) with Five9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five9 Inc has no effect on the direction of Marqeta i.e., Marqeta and Five9 go up and down completely randomly.
Pair Corralation between Marqeta and Five9
Allowing for the 90-day total investment horizon Marqeta is expected to under-perform the Five9. But the stock apears to be less risky and, when comparing its historical volatility, Marqeta is 1.52 times less risky than Five9. The stock trades about -0.13 of its potential returns per unit of risk. The Five9 Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,739 in Five9 Inc on November 18, 2024 and sell it today you would earn a total of 273.00 from holding Five9 Inc or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marqeta vs. Five9 Inc
Performance |
| Timeline |
| Marqeta |
| Five9 Inc |
Marqeta and Five9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marqeta and Five9
The main advantage of trading using opposite Marqeta and Five9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marqeta position performs unexpectedly, Five9 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 Five9 will offset losses from the drop in Five9's long position.The idea behind Marqeta and Five9 Inc 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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