Correlation Between Motive Capital and Power Digital

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

By analyzing existing cross correlation between Motive Capital Corp and Power Digital Infrastructure, you can compare the effects of market volatilities on Motive Capital and Power Digital 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 Motive Capital with a short position of Power Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motive Capital and Power Digital.

Diversification Opportunities for Motive Capital and Power Digital

0.79

Correlation Coefficient

Motive Capital  Power Digital

Poor diversification

The 3 months correlation between Motive and Power is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Motive Capital Corp and Power Digital Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Digital Infras and Motive Capital 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 Motive Capital Corp are associated (or correlated) with Power Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Digital Infras has no effect on the direction of Motive Capital i.e., Motive Capital and Power Digital go up and down completely randomly.

Pair Corralation between Motive Capital and Power Digital

If you would invest  1,051  in Power Digital Infrastructure on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Power Digital Infrastructure or generate 0.0% return on investment over 90 days.

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

Motive Capital Corp  vs.  Power Digital Infrastructure

Motive Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Motive Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Motive Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Power Digital Infras

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Digital Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Power Digital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Motive Capital and Power Digital

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

The idea behind Motive Capital Corp and Power Digital Infrastructure 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.