Correlation Between Pagaya Technologies and PagSeguro Digital
Can any of the company-specific risk be diversified away by investing in both Pagaya Technologies and PagSeguro Digital 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 Pagaya Technologies and PagSeguro Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pagaya Technologies and PagSeguro Digital, you can compare the effects of market volatilities on Pagaya Technologies and PagSeguro Digital 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 Pagaya Technologies with a short position of PagSeguro Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pagaya Technologies and PagSeguro Digital.
Diversification Opportunities for Pagaya Technologies and PagSeguro Digital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pagaya and PagSeguro is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pagaya Technologies and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital and Pagaya Technologies 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 Pagaya Technologies are associated (or correlated) with PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of Pagaya Technologies i.e., Pagaya Technologies and PagSeguro Digital go up and down completely randomly.
Pair Corralation between Pagaya Technologies and PagSeguro Digital
Considering the 90-day investment horizon Pagaya Technologies is expected to generate 2.25 times more return on investment than PagSeguro Digital. However, Pagaya Technologies is 2.25 times more volatile than PagSeguro Digital. It trades about 0.04 of its potential returns per unit of risk. PagSeguro Digital is currently generating about 0.01 per unit of risk. If you would invest 880.00 in Pagaya Technologies on August 28, 2024 and sell it today you would earn a total of 170.00 from holding Pagaya Technologies or generate 19.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pagaya Technologies vs. PagSeguro Digital
Performance |
| Timeline |
| Pagaya Technologies |
| PagSeguro Digital |
Pagaya Technologies and PagSeguro Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pagaya Technologies and PagSeguro Digital
The main advantage of trading using opposite Pagaya Technologies and PagSeguro Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pagaya Technologies position performs unexpectedly, PagSeguro Digital 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 PagSeguro Digital will offset losses from the drop in PagSeguro Digital's long position.| Pagaya Technologies vs. GigaCloud Technology Class | Pagaya Technologies vs. Arqit Quantum | Pagaya Technologies vs. Cemtrex | Pagaya Technologies vs. Paysafe |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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