Correlation Between Elastic NV and Sprout Social

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

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

Diversification Opportunities for Elastic NV and Sprout Social

0.39

Correlation Coefficient

Elastic NV  Sprout Social

Weak diversification

The 3 months correlation between Elastic and Sprout is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Elastic NV and Sprout Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprout Social and Elastic NV 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 Elastic NV 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 Elastic NV i.e., Elastic NV and Sprout Social go up and down completely randomly.

Pair Corralation between Elastic NV and Sprout Social

Given the investment horizon of 90 days Elastic NV is expected to generate 0.98 times more return on investment than Sprout Social. However, Elastic NV is 1.02 times less risky than Sprout Social. It trades about 0.02 of its potential returns per unit of risk. Sprout Social is currently generating about -0.12 per unit of risk. If you would invest  8,292  in Elastic NV on May 2, 2025 and sell it today you would earn a total of  78.00  from holding Elastic NV or generate 0.94% return on investment over 90 days.

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

Elastic NV  vs.  Sprout Social

Elastic NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elastic NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Elastic NV is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Elastic NV and Sprout Social

The main advantage of trading using opposite Elastic NV and Sprout Social positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elastic NV 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 Elastic NV 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.