Correlation Between Pontem Corp and Social Leverage

Can any of the company-specific risk be diversified away by investing in both Pontem Corp and Social Leverage 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 Pontem Corp and Social Leverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pontem Corp and Social Leverage Acquisition, you can compare the effects of market volatilities on Pontem Corp and Social Leverage 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 Pontem Corp with a short position of Social Leverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pontem Corp and Social Leverage.

Diversification Opportunities for Pontem Corp and Social Leverage

-0.06

Correlation Coefficient

Pontem Corp  Social Leverage

Good diversification

The 3 months correlation between Pontem and Social is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Pontem Corp and Social Leverage Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Leverage Acqu and Pontem Corp 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 Pontem Corp are associated (or correlated) with Social Leverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Leverage Acqu has no effect on the direction of Pontem Corp i.e., Pontem Corp and Social Leverage go up and down completely randomly.

Pair Corralation between Pontem Corp and Social Leverage

If you would invest  1,018  in Social Leverage Acquisition on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Social Leverage Acquisition or generate 0.0% return on investment over 90 days.

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

Pontem Corp  vs.  Social Leverage Acquisition

Pontem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pontem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Pontem Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Social Leverage Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pontem Corp and Social Leverage

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

The idea behind Pontem Corp and Social Leverage 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.