Correlation Between Alkami Technology and Envestnet

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

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

Diversification Opportunities for Alkami Technology and Envestnet

-0.47

Correlation Coefficient

Alkami Technology  Envestnet

Very good diversification

The 3 months correlation between Alkami and Envestnet is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alkami Technology and Envestnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envestnet and Alkami Technology 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 Alkami Technology are associated (or correlated) with Envestnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envestnet has no effect on the direction of Alkami Technology i.e., Alkami Technology and Envestnet go up and down completely randomly.

Pair Corralation between Alkami Technology and Envestnet

Given the investment horizon of 90 days Alkami Technology is expected to generate 1.22 times less return on investment than Envestnet. But when comparing it to its historical volatility, Alkami Technology is 1.16 times less risky than Envestnet. It trades about 0.1 of its potential returns per unit of risk. Envestnet is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,245  in Envestnet on January 30, 2024 and sell it today you would earn a total of  1,970  from holding Envestnet or generate 46.41% return on investment over 90 days.

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

Alkami Technology  vs.  Envestnet

Alkami Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkami Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Alkami Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Envestnet

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Alkami Technology and Envestnet

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

The idea behind Alkami Technology and Envestnet 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.