Correlation Between Cepton and Pagaya Technologies
Can any of the company-specific risk be diversified away by investing in both Cepton and Pagaya 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 Cepton and Pagaya Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Pagaya Technologies Ltd, you can compare the effects of market volatilities on Cepton and Pagaya 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 Cepton with a short position of Pagaya Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Pagaya Technologies.
Diversification Opportunities for Cepton and Pagaya Technologies
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cepton and Pagaya is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Pagaya Technologies Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies 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 Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of Cepton i.e., Cepton and Pagaya Technologies go up and down completely randomly.
Pair Corralation between Cepton and Pagaya Technologies
Assuming the 90 days horizon Cepton Inc is expected to generate 1.82 times more return on investment than Pagaya Technologies. However, Cepton is 1.82 times more volatile than Pagaya Technologies Ltd. It trades about 0.06 of its potential returns per unit of risk. Pagaya Technologies Ltd is currently generating about 0.04 per unit of risk. If you would invest 1.65 in Cepton Inc on September 2, 2024 and sell it today you would lose (0.75) from holding Cepton Inc or give up 45.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.32% |
| Values | Daily Returns |
Cepton Inc vs. Pagaya Technologies Ltd
Performance |
| Timeline |
| Cepton Inc |
| Pagaya Technologies |
Cepton and Pagaya Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Pagaya Technologies
The main advantage of trading using opposite Cepton and Pagaya Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Pagaya 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 Pagaya Technologies will offset losses from the drop in Pagaya Technologies' long position.| Cepton vs. Cepton Inc | Cepton vs. Thayer Ventures Acquisition | Cepton vs. Anghami Warrants | Cepton vs. Inspirato |
| Pagaya Technologies vs. Pagaya Technologies | Pagaya Technologies vs. Thayer Ventures Acquisition | Pagaya Technologies vs. Revelation Biosciences |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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