Correlation Between Clearwater Analytics and Sprout Social

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

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

Diversification Opportunities for Clearwater Analytics and Sprout Social

0.88

Correlation Coefficient

Clearwater Analytics  Sprout Social

Very poor diversification

The 3 months correlation between Clearwater and Sprout is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Analytics Holdings and Sprout Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprout Social and Clearwater 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 Clearwater Analytics Holdings are associated (or correlated) with Sprout Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprout Social has no effect on the direction of Clearwater Analytics i.e., Clearwater Analytics and Sprout Social go up and down completely randomly.

Pair Corralation between Clearwater Analytics and Sprout Social

Given the investment horizon of 90 days Clearwater Analytics Holdings is expected to generate 0.71 times more return on investment than Sprout Social. However, Clearwater Analytics Holdings is 1.4 times less risky than Sprout Social. It trades about -0.09 of its potential returns per unit of risk. Sprout Social is currently generating about -0.14 per unit of risk. If you would invest  2,272  in Clearwater Analytics Holdings on May 5, 2025 and sell it today you would lose (247.00) from holding Clearwater Analytics Holdings or give up 10.87% of portfolio value over 90 days.

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

Clearwater Analytics Holdings  vs.  Sprout Social

Clearwater Analytics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearwater Analytics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Sprout Social

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprout Social 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 basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Clearwater Analytics and Sprout Social

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

The idea behind Clearwater Analytics Holdings and Sprout Social 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.