Correlation Between Manhattan Associates and Open Text

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

By analyzing existing cross correlation between Manhattan Associates and Open Text Corp, you can compare the effects of market volatilities on Manhattan Associates and Open Text 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 Manhattan Associates with a short position of Open Text. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manhattan Associates and Open Text.

Diversification Opportunities for Manhattan Associates and Open Text

0.87

Correlation Coefficient

Manhattan Associates  Open Text

Very poor diversification

The 3 months correlation between Manhattan and Open is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Manhattan Associates and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text Corp and Manhattan Associates 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 Manhattan Associates are associated (or correlated) with Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of Manhattan Associates i.e., Manhattan Associates and Open Text go up and down completely randomly.

Pair Corralation between Manhattan Associates and Open Text

Given the investment horizon of 90 days Manhattan Associates is expected to generate 1.48 times more return on investment than Open Text. However, Manhattan Associates is 1.48 times more volatile than Open Text Corp. It trades about -0.02 of its potential returns per unit of risk. Open Text Corp is currently generating about -0.05 per unit of risk. If you would invest  20,028  in Manhattan Associates on February 3, 2025 and sell it today you would lose (1,687) from holding Manhattan Associates or give up 8.42% of portfolio value over 90 days.

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

Manhattan Associates  vs.  Open Text Corp

Manhattan Associates

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manhattan Associates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Manhattan Associates is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Open Text Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Open Text Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Manhattan Associates and Open Text

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

The idea behind Manhattan Associates and Open Text Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.