Correlation Between Verisk Analytics and Synnex

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

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

Diversification Opportunities for Verisk Analytics and Synnex

-0.82

Correlation Coefficient

Verisk Analytics  Synnex

Pay attention - limited upside

The 3 months correlation between Verisk and Synnex is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Verisk Analytics and Synnex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synnex and Verisk Analytics 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 Verisk Analytics are associated (or correlated) with Synnex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synnex has no effect on the direction of Verisk Analytics i.e., Verisk Analytics and Synnex go up and down completely randomly.

Pair Corralation between Verisk Analytics and Synnex

Given the investment horizon of 90 days Verisk Analytics is expected to under-perform the Synnex. But the stock apears to be less risky and, when comparing its historical volatility, Verisk Analytics is 1.17 times less risky than Synnex. The stock trades about -0.02 of its potential returns per unit of risk. The Synnex is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  8,967  in Synnex on January 20, 2024 and sell it today you would earn a total of  2,408  from holding Synnex or generate 26.85% return on investment over 90 days.

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

Verisk Analytics  vs.  Synnex

Verisk Analytics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verisk Analytics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Synnex

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Synnex are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Synnex may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Verisk Analytics and Synnex

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

The idea behind Verisk Analytics and Synnex 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.