Correlation Between SolarWinds Corp and Akamai Technologies

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

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

Diversification Opportunities for SolarWinds Corp and Akamai Technologies

-0.76

Correlation Coefficient

SolarWinds Corp  Akamai Technologies

Pay attention - limited upside

The 3 months correlation between SolarWinds and Akamai is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding SolarWinds Corp and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies and SolarWinds Corp 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 SolarWinds Corp are associated (or correlated) with Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of SolarWinds Corp i.e., SolarWinds Corp and Akamai Technologies go up and down completely randomly.

Pair Corralation between SolarWinds Corp and Akamai Technologies

Considering the 90-day investment horizon SolarWinds Corp is expected to generate 2.29 times less return on investment than Akamai Technologies. But when comparing it to its historical volatility, SolarWinds Corp is 12.74 times less risky than Akamai Technologies. It trades about 0.15 of its potential returns per unit of risk. Akamai Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,415  in Akamai Technologies on February 7, 2025 and sell it today you would earn a total of  129.00  from holding Akamai Technologies or generate 1.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.12%
Values	Daily Returns

SolarWinds Corp  vs.  Akamai Technologies

SolarWinds Corp

Risk-Adjusted Performance

OK

Over the last 90 days SolarWinds Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, SolarWinds Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Akamai Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with SolarWinds Corp and Akamai Technologies

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

The idea behind SolarWinds Corp and Akamai Technologies 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.