Correlation Between Workday and Best Buy

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Can any of the company-specific risk be diversified away by investing in both Workday and Best Buy 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 Workday and Best Buy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workday and Best Buy Co, you can compare the effects of market volatilities on Workday and Best Buy 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 Workday with a short position of Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workday and Best Buy.

Diversification Opportunities for Workday and Best Buy

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Workday and Best is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy and Workday 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 Workday are associated (or correlated) with Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Workday i.e., Workday and Best Buy go up and down completely randomly.

Pair Corralation between Workday and Best Buy

Given the investment horizon of 90 days Workday is expected to generate 1.14 times more return on investment than Best Buy. However, Workday is 1.14 times more volatile than Best Buy Co. It trades about 0.03 of its potential returns per unit of risk. Best Buy Co is currently generating about 0.0 per unit of risk. If you would invest  19,582  in Workday on January 25, 2024 and sell it today you would earn a total of  6,064  from holding Workday or generate 30.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Workday  vs.  Best Buy Co

 Performance 
       Timeline  
Workday 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Workday has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Best Buy 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Best Buy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Workday and Best Buy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Workday and Best Buy

The main advantage of trading using opposite Workday and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.
The idea behind Workday and Best Buy Co 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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