Correlation Between Workiva and Pubmatic
Can any of the company-specific risk be diversified away by investing in both Workiva and Pubmatic 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 Pubmatic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workiva and Pubmatic, you can compare the effects of market volatilities on Workiva and Pubmatic 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 Pubmatic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workiva and Pubmatic.
Diversification Opportunities for Workiva and Pubmatic
Poor diversification
The 3 months correlation between Workiva and Pubmatic is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Pubmatic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pubmatic 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 Pubmatic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pubmatic has no effect on the direction of Workiva i.e., Workiva and Pubmatic go up and down completely randomly.
Pair Corralation between Workiva and Pubmatic
Allowing for the 90-day total investment horizon Workiva is expected to generate 0.7 times more return on investment than Pubmatic. However, Workiva is 1.43 times less risky than Pubmatic. It trades about 0.38 of its potential returns per unit of risk. Pubmatic is currently generating about 0.07 per unit of risk. If you would invest 8,051 in Workiva on August 31, 2024 and sell it today you would earn a total of 1,634 from holding Workiva or generate 20.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workiva vs. Pubmatic
Performance |
| Timeline |
| Workiva |
| Pubmatic |
Workiva and Pubmatic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workiva and Pubmatic
The main advantage of trading using opposite Workiva and Pubmatic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva position performs unexpectedly, Pubmatic 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 Pubmatic will offset losses from the drop in Pubmatic's long position.The idea behind Workiva and Pubmatic 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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