Correlation Between Pagaya Technologies and Stem
Can any of the company-specific risk be diversified away by investing in both Pagaya Technologies and Stem 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 Stem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pagaya Technologies and Stem Inc, you can compare the effects of market volatilities on Pagaya Technologies and Stem 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 Stem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pagaya Technologies and Stem.
Diversification Opportunities for Pagaya Technologies and Stem
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pagaya and Stem is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pagaya Technologies and Stem Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stem Inc 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 Stem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stem Inc has no effect on the direction of Pagaya Technologies i.e., Pagaya Technologies and Stem go up and down completely randomly.
Pair Corralation between Pagaya Technologies and Stem
Considering the 90-day investment horizon Pagaya Technologies is expected to generate 1.19 times more return on investment than Stem. However, Pagaya Technologies is 1.19 times more volatile than Stem Inc. It trades about -0.03 of its potential returns per unit of risk. Stem Inc is currently generating about -0.08 per unit of risk. If you would invest 1,096 in Pagaya Technologies on August 24, 2024 and sell it today you would lose (196.00) from holding Pagaya Technologies or give up 17.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pagaya Technologies vs. Stem Inc
Performance |
| Timeline |
| Pagaya Technologies |
| Stem Inc |
Pagaya Technologies and Stem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pagaya Technologies and Stem
The main advantage of trading using opposite Pagaya Technologies and Stem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pagaya Technologies position performs unexpectedly, Stem 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 Stem will offset losses from the drop in Stem's long position.| Pagaya Technologies vs. Alarum Technologies | Pagaya Technologies vs. Arqit Quantum | Pagaya Technologies vs. Nutanix | Pagaya Technologies vs. Palo Alto Networks |
| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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