Correlation Between Descartes Systems and SpringBig Holdings
Can any of the company-specific risk be diversified away by investing in both Descartes Systems and SpringBig Holdings 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 Descartes Systems and SpringBig Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Descartes Systems Group and SpringBig Holdings, you can compare the effects of market volatilities on Descartes Systems and SpringBig Holdings 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 Descartes Systems with a short position of SpringBig Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Descartes Systems and SpringBig Holdings.
Diversification Opportunities for Descartes Systems and SpringBig Holdings
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Descartes and SpringBig is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group and SpringBig Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringBig Holdings and Descartes Systems 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 Descartes Systems Group are associated (or correlated) with SpringBig Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringBig Holdings has no effect on the direction of Descartes Systems i.e., Descartes Systems and SpringBig Holdings go up and down completely randomly.
Pair Corralation between Descartes Systems and SpringBig Holdings
If you would invest 10,553 in Descartes Systems Group on August 29, 2024 and sell it today you would earn a total of 1,157 from holding Descartes Systems Group or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Descartes Systems Group vs. SpringBig Holdings
Performance |
| Timeline |
| Descartes Systems |
| SpringBig Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Descartes Systems and SpringBig Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Descartes Systems and SpringBig Holdings
The main advantage of trading using opposite Descartes Systems and SpringBig Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Descartes Systems position performs unexpectedly, SpringBig Holdings 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 SpringBig Holdings will offset losses from the drop in SpringBig Holdings' long position.The idea behind Descartes Systems Group and SpringBig Holdings 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.| SpringBig Holdings vs. OLB Group | SpringBig Holdings vs. Friendable | SpringBig Holdings vs. LifeSpeak | SpringBig Holdings vs. Creative Realities |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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