Correlation Between Splunk and StoneCo
Can any of the company-specific risk be diversified away by investing in both Splunk and StoneCo 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 Splunk and StoneCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Splunk Inc and StoneCo, you can compare the effects of market volatilities on Splunk and StoneCo 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 Splunk with a short position of StoneCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Splunk and StoneCo.
Diversification Opportunities for Splunk and StoneCo
Excellent diversification
The 3 months correlation between Splunk and StoneCo is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Splunk Inc and StoneCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StoneCo and Splunk 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 Splunk Inc are associated (or correlated) with StoneCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StoneCo has no effect on the direction of Splunk i.e., Splunk and StoneCo go up and down completely randomly.
Pair Corralation between Splunk and StoneCo
If you would invest 10,358 in Splunk Inc on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Splunk Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Splunk Inc vs. StoneCo
Performance |
| Timeline |
| Splunk Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| StoneCo |
Splunk and StoneCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Splunk and StoneCo
The main advantage of trading using opposite Splunk and StoneCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Splunk position performs unexpectedly, StoneCo 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 StoneCo will offset losses from the drop in StoneCo's long position.| Splunk vs. Crowdstrike Holdings | Splunk vs. Adobe Systems Incorporated | Splunk vs. Palantir Technologies | Splunk vs. Zscaler |
| StoneCo vs. Oneconnect Financial Technology | StoneCo vs. Global Business Travel | StoneCo vs. Alight Inc | StoneCo 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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