Correlation Between CS Disco and Riskified

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

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

Diversification Opportunities for CS Disco and Riskified

-0.58

Correlation Coefficient

CS Disco  Riskified

Excellent diversification

The 3 months correlation between LAW and Riskified is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CS Disco LLC and Riskified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riskified and CS Disco 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 CS Disco LLC are associated (or correlated) with Riskified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riskified has no effect on the direction of CS Disco i.e., CS Disco and Riskified go up and down completely randomly.

Pair Corralation between CS Disco and Riskified

Considering the 90-day investment horizon CS Disco LLC is expected to generate 0.65 times more return on investment than Riskified. However, CS Disco LLC is 1.53 times less risky than Riskified. It trades about 0.12 of its potential returns per unit of risk. Riskified is currently generating about -0.1 per unit of risk. If you would invest  513.00  in CS Disco LLC on August 11, 2024 and sell it today you would earn a total of  80.00  from holding CS Disco LLC or generate 15.59% return on investment over 90 days.

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

CS Disco LLC  vs.  Riskified

CS Disco LLC

Risk-Adjusted Performance

9 of 100

OK

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

Riskified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Riskified has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CS Disco and Riskified

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

The idea behind CS Disco LLC and Riskified 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.