Correlation Between Workday and Oatly Group

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

Diversification Opportunities for Workday and Oatly Group

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Workday and Oatly is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB and Workday 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 Workday are associated (or correlated) with Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Workday i.e., Workday and Oatly Group go up and down completely randomly.

Pair Corralation between Workday and Oatly Group

Given the investment horizon of 90 days Workday is expected to generate 0.8 times more return on investment than Oatly Group. However, Workday is 1.25 times less risky than Oatly Group. It trades about 0.25 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.14 per unit of risk. If you would invest  13,263  in Workday on September 5, 2022 and sell it today you would earn a total of  3,836  from holding Workday or generate 28.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Workday  vs.  Oatly Group AB

 Performance (%) 
       Timeline  
Workday 
Workday Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Workday may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Workday Price Channel

Oatly Group AB 
Oatly Performance
0 of 100
Over the last 90 days Oatly Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for the company investors.

Oatly Price Channel

Workday and Oatly Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Workday and Oatly Group

The main advantage of trading using opposite Workday and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workday position performs unexpectedly, Oatly Group 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 Oatly Group will offset losses from the drop in Oatly Group's long position.
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The idea behind Workday and Oatly Group AB 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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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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