Correlation Between VeriSign and Informatica

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

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

Diversification Opportunities for VeriSign and Informatica

-0.37

Correlation Coefficient

VeriSign  Informatica

Very good diversification

The 3 months correlation between VeriSign and Informatica is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding VeriSign and Informatica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica and VeriSign 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 VeriSign are associated (or correlated) with Informatica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica has no effect on the direction of VeriSign i.e., VeriSign and Informatica go up and down completely randomly.

Pair Corralation between VeriSign and Informatica

Given the investment horizon of 90 days VeriSign is expected to generate 1.24 times more return on investment than Informatica. However, VeriSign is 1.24 times more volatile than Informatica. It trades about 0.31 of its potential returns per unit of risk. Informatica is currently generating about 0.28 per unit of risk. If you would invest  24,713  in VeriSign on February 10, 2025 and sell it today you would earn a total of  3,428  from holding VeriSign or generate 13.87% return on investment over 90 days.

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

VeriSign  vs.  Informatica

VeriSign

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, VeriSign displayed solid returns over the last few months and may actually be approaching a breakup point.

Informatica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Informatica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with VeriSign and Informatica

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

The idea behind VeriSign and Informatica 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.