Correlation Between Direct Digital and Verint Systems

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

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

Diversification Opportunities for Direct Digital and Verint Systems

0.26

Correlation Coefficient

Direct Digital  Verint Systems

Modest diversification

The 3 months correlation between Direct and Verint is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Verint Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verint Systems and Direct Digital 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 Direct Digital Holdings are associated (or correlated) with Verint Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verint Systems has no effect on the direction of Direct Digital i.e., Direct Digital and Verint Systems go up and down completely randomly.

Pair Corralation between Direct Digital and Verint Systems

Given the investment horizon of 90 days Direct Digital is expected to generate 28.68 times less return on investment than Verint Systems. In addition to that, Direct Digital is 1.51 times more volatile than Verint Systems. It trades about 0.0 of its total potential returns per unit of risk. Verint Systems is currently generating about 0.1 per unit of volatility. If you would invest  1,714  in Verint Systems on May 26, 2025 and sell it today you would earn a total of  333.00  from holding Verint Systems or generate 19.43% return on investment over 90 days.

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

Direct Digital Holdings  vs.  Verint Systems

Direct Digital Holdings

Risk-Adjusted Performance

Weakest

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

Verint Systems

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Verint Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Verint Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direct Digital and Verint Systems

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

The idea behind Direct Digital Holdings and Verint 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.