Correlation Between Direct Digital and Thayer Ventures

Can any of the company-specific risk be diversified away by investing in both Direct Digital and Thayer Ventures 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 Direct Digital and Thayer Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direct Digital Holdings and Thayer Ventures Acquisition, you can compare the effects of market volatilities on Direct Digital and Thayer Ventures 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 Direct Digital with a short position of Thayer Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Digital and Thayer Ventures.

Diversification Opportunities for Direct Digital and Thayer Ventures

0.24

Correlation Coefficient

Direct Digital  Thayer Ventures

Modest diversification

The 3 months correlation between Direct and Thayer is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Direct Digital Holdings and Thayer Ventures Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thayer Ventures Acqu and Direct Digital 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 Direct Digital Holdings are associated (or correlated) with Thayer Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thayer Ventures Acqu has no effect on the direction of Direct Digital i.e., Direct Digital and Thayer Ventures go up and down completely randomly.

Pair Corralation between Direct Digital and Thayer Ventures

Given the investment horizon of 90 days Direct Digital Holdings is expected to under-perform the Thayer Ventures. But the stock apears to be less risky and, when comparing its historical volatility, Direct Digital Holdings is 2.13 times less risky than Thayer Ventures. The stock trades about -0.43 of its potential returns per unit of risk. The Thayer Ventures Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.30  in Thayer Ventures Acquisition on September 13, 2024 and sell it today you would lose (0.34) from holding Thayer Ventures Acquisition or give up 26.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Direct Digital Holdings  vs.  Thayer Ventures Acquisition

Direct Digital Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direct Digital Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Thayer Ventures Acqu

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thayer Ventures Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Thayer Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Direct Digital and Thayer Ventures

The main advantage of trading using opposite Direct Digital and Thayer Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Digital position performs unexpectedly, Thayer Ventures 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 Thayer Ventures will offset losses from the drop in Thayer Ventures' long position.

The idea behind Direct Digital Holdings and Thayer Ventures Acquisition 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.