Correlation Between Domo and Trade Desk

Can any of the company-specific risk be diversified away by investing in both Domo and Trade Desk 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 Domo and Trade Desk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Domo Inc and Trade Desk, you can compare the effects of market volatilities on Domo and Trade Desk 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 Domo with a short position of Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Domo and Trade Desk.

Diversification Opportunities for Domo and Trade Desk

-0.6

Correlation Coefficient

Domo  Trade Desk

Excellent diversification

The 3 months correlation between Domo and Trade is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Domo Inc and Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk and Domo 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 Domo Inc are associated (or correlated) with Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Domo i.e., Domo and Trade Desk go up and down completely randomly.

Pair Corralation between Domo and Trade Desk

Given the investment horizon of 90 days Domo Inc is expected to under-perform the Trade Desk. But the stock apears to be less risky and, when comparing its historical volatility, Domo Inc is 1.09 times less risky than Trade Desk. The stock trades about -0.19 of its potential returns per unit of risk. The Trade Desk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,770  in Trade Desk on March 12, 2024 and sell it today you would earn a total of  622.00  from holding Trade Desk or generate 7.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Domo Inc  vs.  Trade Desk

Domo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Domo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Trade Desk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Desk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Trade Desk exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Domo and Trade Desk

The main advantage of trading using opposite Domo and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Domo position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.

The idea behind Domo Inc and Trade Desk 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.