Correlation Between Cepton and Inspirato
Can any of the company-specific risk be diversified away by investing in both Cepton and Inspirato 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 Cepton and Inspirato into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Inspirato, you can compare the effects of market volatilities on Cepton and Inspirato 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 Cepton with a short position of Inspirato. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Inspirato.
Diversification Opportunities for Cepton and Inspirato
Excellent diversification
The 3 months correlation between Cepton and Inspirato is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Inspirato in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspirato and Cepton 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 Cepton Inc are associated (or correlated) with Inspirato. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspirato has no effect on the direction of Cepton i.e., Cepton and Inspirato go up and down completely randomly.
Pair Corralation between Cepton and Inspirato
Assuming the 90 days horizon Cepton Inc is expected to generate 1.45 times more return on investment than Inspirato. However, Cepton is 1.45 times more volatile than Inspirato. It trades about 0.03 of its potential returns per unit of risk. Inspirato is currently generating about 0.03 per unit of risk. If you would invest 1.00 in Cepton Inc on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Cepton Inc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Cepton Inc vs. Inspirato
Performance |
| Timeline |
| Cepton Inc |
| Inspirato |
Cepton and Inspirato Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Inspirato
The main advantage of trading using opposite Cepton and Inspirato positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Inspirato 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 Inspirato will offset losses from the drop in Inspirato's long position.The idea behind Cepton Inc and Inspirato 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.| Inspirato vs. Trip Group Ltd | Inspirato vs. Yatra Online | Inspirato vs. Travel Leisure Co | Inspirato vs. Mondee Holdings |
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 the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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