Correlation Between Stem and Pagaya Technologies
Can any of the company-specific risk be diversified away by investing in both Stem and Pagaya 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 Stem and Pagaya Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Inc and Pagaya Technologies, you can compare the effects of market volatilities on Stem and Pagaya 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 Stem with a short position of Pagaya Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem and Pagaya Technologies.
Diversification Opportunities for Stem and Pagaya Technologies
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stem and Pagaya is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and Pagaya Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies and Stem 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 Stem Inc are associated (or correlated) with Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of Stem i.e., Stem and Pagaya Technologies go up and down completely randomly.
Pair Corralation between Stem and Pagaya Technologies
Given the investment horizon of 90 days Stem Inc is expected to under-perform the Pagaya Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Stem Inc is 1.19 times less risky than Pagaya Technologies. The stock trades about -0.08 of its potential returns per unit of risk. The Pagaya Technologies is currently generating about -0.03 of returns per unit of risk over similar time horizon. 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 |
Stem Inc vs. Pagaya Technologies
Performance |
| Timeline |
| Stem Inc |
| Pagaya Technologies |
Stem and Pagaya Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem and Pagaya Technologies
The main advantage of trading using opposite Stem and Pagaya Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem position performs unexpectedly, Pagaya 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 Pagaya Technologies will offset losses from the drop in Pagaya Technologies' long position.| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies |
| Pagaya Technologies vs. Alarum Technologies | Pagaya Technologies vs. Arqit Quantum | Pagaya Technologies vs. Nutanix | Pagaya Technologies vs. Palo Alto Networks |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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