Correlation Between Pagaya Technologies and Cepton
Can any of the company-specific risk be diversified away by investing in both Pagaya Technologies and Cepton 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 Cepton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pagaya Technologies Ltd and Cepton Inc, you can compare the effects of market volatilities on Pagaya Technologies and Cepton 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 Cepton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pagaya Technologies and Cepton.
Diversification Opportunities for Pagaya Technologies and Cepton
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pagaya and Cepton is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pagaya Technologies Ltd and Cepton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cepton 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 Ltd are associated (or correlated) with Cepton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cepton Inc has no effect on the direction of Pagaya Technologies i.e., Pagaya Technologies and Cepton go up and down completely randomly.
Pair Corralation between Pagaya Technologies and Cepton
Assuming the 90 days horizon Pagaya Technologies is expected to generate 1.41 times less return on investment than Cepton. But when comparing it to its historical volatility, Pagaya Technologies Ltd is 1.55 times less risky than Cepton. It trades about 0.05 of its potential returns per unit of risk. Cepton Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Cepton Inc on August 31, 2024 and sell it today you would lose (10.26) from holding Cepton Inc or give up 93.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.76% |
| Values | Daily Returns |
Pagaya Technologies Ltd vs. Cepton Inc
Performance |
| Timeline |
| Pagaya Technologies |
| Cepton Inc |
Pagaya Technologies and Cepton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pagaya Technologies and Cepton
The main advantage of trading using opposite Pagaya Technologies and Cepton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pagaya Technologies position performs unexpectedly, Cepton 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 Cepton will offset losses from the drop in Cepton's long position.| Pagaya Technologies vs. Pagaya Technologies | Pagaya Technologies vs. Thayer Ventures Acquisition | Pagaya Technologies vs. Revelation Biosciences |
| Cepton vs. Cepton Inc | Cepton vs. Thayer Ventures Acquisition | Cepton vs. Anghami Warrants | Cepton vs. Inspirato |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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