Correlation Between S A P and Workiva
Can any of the company-specific risk be diversified away by investing in both S A P and Workiva 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 S A P and Workiva into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Workiva, you can compare the effects of market volatilities on S A P and Workiva 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 S A P with a short position of Workiva. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Workiva.
Diversification Opportunities for S A P and Workiva
Poor diversification
The 3 months correlation between SAP and Workiva is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Workiva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workiva and S A P 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 SAP SE are associated (or correlated) with Workiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workiva has no effect on the direction of S A P i.e., S A P and Workiva go up and down completely randomly.
Pair Corralation between S A P and Workiva
Assuming the 90 days trading horizon S A P is expected to generate 61.36 times less return on investment than Workiva. But when comparing it to its historical volatility, SAP SE is 1.87 times less risky than Workiva. It trades about 0.01 of its potential returns per unit of risk. Workiva is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 7,300 in Workiva on August 29, 2024 and sell it today you would earn a total of 2,000 from holding Workiva or generate 27.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE vs. Workiva
Performance |
| Timeline |
| SAP SE |
| Workiva |
S A P and Workiva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Workiva
The main advantage of trading using opposite S A P and Workiva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Workiva 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 Workiva will offset losses from the drop in Workiva's long position.| S A P vs. Superior Plus Corp | S A P vs. NMI Holdings | S A P vs. Origin Agritech | S A P vs. SIVERS SEMICONDUCTORS AB |
| Workiva vs. Superior Plus Corp | Workiva vs. NMI Holdings | Workiva vs. Origin Agritech | Workiva vs. SIVERS SEMICONDUCTORS AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |