Correlation Between Associated Capital and Cartesian Growth

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

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

Diversification Opportunities for Associated Capital and Cartesian Growth

0.26

Correlation Coefficient

Associated Capital  Cartesian Growth

Modest diversification

The 3 months correlation between Associated and Cartesian is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Cartesian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartesian Growth and Associated 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 Associated Capital Group 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 Associated Capital i.e., Associated Capital and Cartesian Growth go up and down completely randomly.

Pair Corralation between Associated Capital and Cartesian Growth

Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 13.99 times more return on investment than Cartesian Growth. However, Associated Capital is 13.99 times more volatile than Cartesian Growth. It trades about 0.1 of its potential returns per unit of risk. Cartesian Growth is currently generating about 0.1 per unit of risk. If you would invest  3,498  in Associated Capital Group on December 2, 2024 and sell it today you would earn a total of  228.00  from holding Associated Capital Group or generate 6.52% return on investment over 90 days.

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

Associated Capital Group  vs.  Cartesian Growth

Associated Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Cartesian Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cartesian Growth are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Cartesian Growth 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 Associated Capital and Cartesian Growth

The main advantage of trading using opposite Associated Capital and Cartesian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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 Associated Capital Group 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.