Correlation Between Workiva and Jfrog
Can any of the company-specific risk be diversified away by investing in both Workiva and Jfrog 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 Workiva and Jfrog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workiva and Jfrog, you can compare the effects of market volatilities on Workiva and Jfrog 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 Workiva with a short position of Jfrog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workiva and Jfrog.
Diversification Opportunities for Workiva and Jfrog
Very good diversification
The 3 months correlation between Workiva and Jfrog is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Jfrog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jfrog and Workiva 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 Workiva are associated (or correlated) with Jfrog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jfrog has no effect on the direction of Workiva i.e., Workiva and Jfrog go up and down completely randomly.
Pair Corralation between Workiva and Jfrog
Allowing for the 90-day total investment horizon Workiva is expected to generate 6.93 times less return on investment than Jfrog. But when comparing it to its historical volatility, Workiva is 1.5 times less risky than Jfrog. It trades about 0.01 of its potential returns per unit of risk. Jfrog is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Jfrog on November 19, 2024 and sell it today you would earn a total of 1,680 from holding Jfrog or generate 73.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workiva vs. Jfrog
Performance |
| Timeline |
| Workiva |
| Jfrog |
Workiva and Jfrog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workiva and Jfrog
The main advantage of trading using opposite Workiva and Jfrog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva position performs unexpectedly, Jfrog 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 Jfrog will offset losses from the drop in Jfrog's long position.The idea behind Workiva and Jfrog 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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