Correlation Between Domo and Mitek Systems

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

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

Diversification Opportunities for Domo and Mitek Systems

0.43

Correlation Coefficient

Domo  Mitek Systems

Very weak diversification

The 3 months correlation between Domo and Mitek is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Domo Inc and Mitek Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitek Systems and Domo 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 Domo Inc are associated (or correlated) with Mitek Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitek Systems has no effect on the direction of Domo i.e., Domo and Mitek Systems go up and down completely randomly.

Pair Corralation between Domo and Mitek Systems

Given the investment horizon of 90 days Domo Inc is expected to generate 1.28 times more return on investment than Mitek Systems. However, Domo is 1.28 times more volatile than Mitek Systems. It trades about 0.13 of its potential returns per unit of risk. Mitek Systems is currently generating about 0.08 per unit of risk. If you would invest  723.00  in Domo Inc on August 11, 2024 and sell it today you would earn a total of  178.00  from holding Domo Inc or generate 24.62% return on investment over 90 days.

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

Domo Inc  vs.  Mitek Systems

Domo Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Domo Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Domo displayed solid returns over the last few months and may actually be approaching a breakup point.

Mitek Systems

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Domo and Mitek Systems

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

The idea behind Domo Inc and Mitek Systems 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.