Correlation Between Workiva and Xerox Corp
Can any of the company-specific risk be diversified away by investing in both Workiva and Xerox Corp 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 Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workiva and Xerox Corp, you can compare the effects of market volatilities on Workiva and Xerox Corp 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 Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workiva and Xerox Corp.
Diversification Opportunities for Workiva and Xerox Corp
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Workiva and Xerox is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp 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 Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of Workiva i.e., Workiva and Xerox Corp go up and down completely randomly.
Pair Corralation between Workiva and Xerox Corp
Allowing for the 90-day total investment horizon Workiva is expected to generate 0.59 times more return on investment than Xerox Corp. However, Workiva is 1.69 times less risky than Xerox Corp. It trades about 0.22 of its potential returns per unit of risk. Xerox Corp is currently generating about -0.06 per unit of risk. If you would invest 7,481 in Workiva on August 31, 2024 and sell it today you would earn a total of 2,204 from holding Workiva or generate 29.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workiva vs. Xerox Corp
Performance |
| Timeline |
| Workiva |
| Xerox Corp |
Workiva and Xerox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workiva and Xerox Corp
The main advantage of trading using opposite Workiva and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva position performs unexpectedly, Xerox Corp 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 Xerox Corp will offset losses from the drop in Xerox Corp's long position.The idea behind Workiva and Xerox Corp 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.| Xerox Corp vs. ExlService Holdings | Xerox Corp vs. CSP Inc | Xerox Corp vs. ASGN Inc | Xerox Corp vs. Jack Henry Associates |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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