Correlation Between SPACE and Freight Technologies
Can any of the company-specific risk be diversified away by investing in both SPACE and Freight 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 SPACE and Freight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Freight Technologies, you can compare the effects of market volatilities on SPACE and Freight 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 SPACE with a short position of Freight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Freight Technologies.
Diversification Opportunities for SPACE and Freight Technologies
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPACE and Freight is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Freight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freight Technologies and SPACE 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 SPACE are associated (or correlated) with Freight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freight Technologies has no effect on the direction of SPACE i.e., SPACE and Freight Technologies go up and down completely randomly.
Pair Corralation between SPACE and Freight Technologies
Assuming the 90 days horizon SPACE is expected to generate 1.08 times more return on investment than Freight Technologies. However, SPACE is 1.08 times more volatile than Freight Technologies. It trades about 0.08 of its potential returns per unit of risk. Freight Technologies is currently generating about -0.31 per unit of risk. If you would invest 42.00 in SPACE on August 24, 2024 and sell it today you would earn a total of 3.00 from holding SPACE or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPACE vs. Freight Technologies
Performance |
| Timeline |
| SPACE |
| Freight Technologies |
SPACE and Freight Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Freight Technologies
The main advantage of trading using opposite SPACE and Freight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, Freight 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 Freight Technologies will offset losses from the drop in Freight Technologies' long position.The idea behind SPACE and Freight 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.| Freight Technologies vs. Paylocity Holdng | Freight Technologies vs. Alkami Technology | Freight Technologies vs. Envestnet | Freight Technologies vs. Paycor HCM |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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