Correlation Between Mitek Systems and Sprout Social

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

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

Diversification Opportunities for Mitek Systems and Sprout Social

0.41

Correlation Coefficient

Mitek Systems  Sprout Social

Very weak diversification

The 3 months correlation between Mitek and Sprout is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mitek Systems and Sprout Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprout Social and Mitek Systems 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 Mitek Systems 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 Mitek Systems i.e., Mitek Systems and Sprout Social go up and down completely randomly.

Pair Corralation between Mitek Systems and Sprout Social

Given the investment horizon of 90 days Mitek Systems is expected to generate 0.56 times more return on investment than Sprout Social. However, Mitek Systems is 1.78 times less risky than Sprout Social. It trades about 0.11 of its potential returns per unit of risk. Sprout Social is currently generating about -0.05 per unit of risk. If you would invest  898.00  in Mitek Systems on August 11, 2024 and sell it today you would earn a total of  43.00  from holding Mitek Systems or generate 4.79% return on investment over 90 days.

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

Mitek Systems  vs.  Sprout Social

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.

Sprout Social

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mitek Systems and Sprout Social

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

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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 Transaction History module to view history of all your transactions and understand their impact on performance.