Correlation Between Akamai Technologies and Informatica Inc

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Can any of the company-specific risk be diversified away by investing in both Akamai Technologies and Informatica Inc 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 Akamai Technologies and Informatica Inc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akamai Technologies and Informatica Inc Cl, you can compare the effects of market volatilities on Akamai Technologies and Informatica Inc 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 Akamai Technologies with a short position of Informatica Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies and Informatica Inc.

Diversification Opportunities for Akamai Technologies and Informatica Inc

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Akamai and Informatica is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies and Informatica Inc Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica Inc and Akamai Technologies 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 Akamai Technologies are associated (or correlated) with Informatica Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica Inc has no effect on the direction of Akamai Technologies i.e., Akamai Technologies and Informatica Inc go up and down completely randomly.

Pair Corralation between Akamai Technologies and Informatica Inc

Given the investment horizon of 90 days Akamai Technologies is expected to under-perform the Informatica Inc. But the stock apears to be less risky and, when comparing its historical volatility, Akamai Technologies is 2.39 times less risky than Informatica Inc. The stock trades about -0.01 of its potential returns per unit of risk. The Informatica Inc Cl is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,900  in Informatica Inc Cl on May 17, 2022 and sell it today you would lose (526.00)  from holding Informatica Inc Cl or give up 18.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy40.56%
ValuesDaily Returns

Akamai Technologies  vs.  Informatica Inc Cl

 Performance (%) 
       Timeline  
Akamai Technologies 
Akamai Performance
0 of 100
Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Akamai Technologies is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Akamai Price Channel

Informatica Inc 
Informatica Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Informatica Inc Cl are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Informatica Inc sustained solid returns over the last few months and may actually be approaching a breakup point.

Informatica Price Channel

Akamai Technologies and Informatica Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Akamai Technologies and Informatica Inc

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

Akamai Technologies

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Akamai Technologies as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Akamai Technologies' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Akamai Technologies' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Akamai Technologies.
The idea behind Akamai Technologies and Informatica Inc Cl 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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