Correlation Between Intelligent Living and Pagaya Technologies

Can any of the company-specific risk be diversified away by investing in both Intelligent Living 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 Intelligent Living and Pagaya Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intelligent Living Application and Pagaya Technologies Ltd, you can compare the effects of market volatilities on Intelligent Living 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 Intelligent Living with a short position of Pagaya Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intelligent Living and Pagaya Technologies.

Diversification Opportunities for Intelligent Living and Pagaya Technologies

0.47

Correlation Coefficient

Intelligent Living  Pagaya Technologies

Very weak diversification

The 3 months correlation between Intelligent and Pagaya is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intelligent Living Application and Pagaya Technologies Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies and Intelligent Living 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 Intelligent Living Application 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 Intelligent Living i.e., Intelligent Living and Pagaya Technologies go up and down completely randomly.

Pair Corralation between Intelligent Living and Pagaya Technologies

Given the investment horizon of 90 days Intelligent Living Application is expected to generate 0.22 times more return on investment than Pagaya Technologies. However, Intelligent Living Application is 4.48 times less risky than Pagaya Technologies. It trades about -0.03 of its potential returns per unit of risk. Pagaya Technologies Ltd is currently generating about -0.04 per unit of risk. If you would invest  106.00  in Intelligent Living Application on September 22, 2024 and sell it today you would lose (10.00) from holding Intelligent Living Application or give up 9.43% of portfolio value over 90 days.

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

Intelligent Living Application  vs.  Pagaya Technologies Ltd

Intelligent Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intelligent Living Application has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pagaya Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pagaya Technologies Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Intelligent Living and Pagaya Technologies

The main advantage of trading using opposite Intelligent Living and Pagaya Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intelligent Living 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.

The idea behind Intelligent Living Application and Pagaya Technologies Ltd 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.