Correlation Between VeriSign and MongoDB

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

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

Diversification Opportunities for VeriSign and MongoDB

-0.69

Correlation Coefficient

VeriSign  MongoDB

Excellent diversification

The 3 months correlation between VeriSign and MongoDB is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding VeriSign and MongoDB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MongoDB 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 MongoDB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MongoDB has no effect on the direction of VeriSign i.e., VeriSign and MongoDB go up and down completely randomly.

Pair Corralation between VeriSign and MongoDB

Given the investment horizon of 90 days VeriSign is expected to generate 0.33 times more return on investment than MongoDB. However, VeriSign is 3.04 times less risky than MongoDB. It trades about 0.27 of its potential returns per unit of risk. MongoDB is currently generating about -0.11 per unit of risk. If you would invest  21,401  in VeriSign on January 30, 2025 and sell it today you would earn a total of  6,811  from holding VeriSign or generate 31.83% return on investment over 90 days.

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

VeriSign  vs.  MongoDB

VeriSign

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VeriSign are ranked lower than 20 (%) 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.

MongoDB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with VeriSign and MongoDB

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

The idea behind VeriSign and MongoDB 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.