Correlation Between Sprout Social and Alkami Technology
Can any of the company-specific risk be diversified away by investing in both Sprout Social and Alkami Technology 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 Sprout Social and Alkami Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprout Social and Alkami Technology, you can compare the effects of market volatilities on Sprout Social and Alkami Technology 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 Sprout Social with a short position of Alkami Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprout Social and Alkami Technology.
Diversification Opportunities for Sprout Social and Alkami Technology
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sprout and Alkami is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Alkami Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkami Technology and Sprout Social 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 Sprout Social are associated (or correlated) with Alkami Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkami Technology has no effect on the direction of Sprout Social i.e., Sprout Social and Alkami Technology go up and down completely randomly.
Pair Corralation between Sprout Social and Alkami Technology
Considering the 90-day investment horizon Sprout Social is expected to generate 0.78 times more return on investment than Alkami Technology. However, Sprout Social is 1.29 times less risky than Alkami Technology. It trades about 0.09 of its potential returns per unit of risk. Alkami Technology is currently generating about -0.2 per unit of risk. If you would invest 3,206 in Sprout Social on October 24, 2024 and sell it today you would earn a total of 99.00 from holding Sprout Social or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprout Social vs. Alkami Technology
Performance |
| Timeline |
| Sprout Social |
| Alkami Technology |
Sprout Social and Alkami Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprout Social and Alkami Technology
The main advantage of trading using opposite Sprout Social and Alkami Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprout Social position performs unexpectedly, Alkami Technology 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 Alkami Technology will offset losses from the drop in Alkami Technology's long position.| Sprout Social vs. Progyny | Sprout Social vs. Endava | Sprout Social vs. Goosehead Insurance | Sprout Social vs. Sitime |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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