Correlation Between Riskified and Walkme

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

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

Diversification Opportunities for Riskified and Walkme

-0.58

Correlation Coefficient

Riskified  Walkme

Excellent diversification

The 3 months correlation between Riskified and Walkme is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Riskified and Walkme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walkme and Riskified 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 Riskified are associated (or correlated) with Walkme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walkme has no effect on the direction of Riskified i.e., Riskified and Walkme go up and down completely randomly.

Pair Corralation between Riskified and Walkme

Given the investment horizon of 90 days Riskified is expected to generate 1.88 times more return on investment than Walkme. However, Riskified is 1.88 times more volatile than Walkme. It trades about 0.16 of its potential returns per unit of risk. Walkme is currently generating about -0.18 per unit of risk. If you would invest  452.00  in Riskified on February 19, 2024 and sell it today you would earn a total of  145.00  from holding Riskified or generate 32.08% return on investment over 90 days.

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

Riskified  vs.  Walkme

Riskified

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Riskified are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, Riskified exhibited solid returns over the last few months and may actually be approaching a breakup point.

Walkme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walkme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Riskified and Walkme

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

The idea behind Riskified and Walkme 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.