Correlation Between Power Digital and Cartesian Growth

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

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

Diversification Opportunities for Power Digital and Cartesian Growth

0.12

Correlation Coefficient

Power Digital  Cartesian Growth

Average diversification

The 3 months correlation between Power and Cartesian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Power Digital Infrastructure and Cartesian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartesian Growth and Power 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 Power Digital Infrastructure are associated (or correlated) with Cartesian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartesian Growth has no effect on the direction of Power Digital i.e., Power Digital and Cartesian Growth go up and down completely randomly.

Pair Corralation between Power Digital and Cartesian Growth

If you would invest  10.00  in Power Digital Infrastructure on September 5, 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	Insignificant
Accuracy	1.59%
Values	Daily Returns

Power Digital Infrastructure  vs.  Cartesian Growth

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 fairly stable fundamental drivers, Power Digital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cartesian Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cartesian Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Power Digital and Cartesian Growth

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

The idea behind Power Digital Infrastructure and Cartesian Growth 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.