Correlation Between BASE and Clear Secure

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

By analyzing existing cross correlation between BASE Inc and Clear Secure, you can compare the effects of market volatilities on BASE and Clear Secure 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 BASE with a short position of Clear Secure. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASE and Clear Secure.

Diversification Opportunities for BASE and Clear Secure

-0.56

Correlation Coefficient

BASE  Clear Secure

Excellent diversification

The 3 months correlation between BASE and Clear is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Clear Secure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Secure and BASE 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 BASE Inc are associated (or correlated) with Clear Secure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Secure has no effect on the direction of BASE i.e., BASE and Clear Secure go up and down completely randomly.

Pair Corralation between BASE and Clear Secure

Assuming the 90 days horizon BASE Inc is expected to generate 2.9 times more return on investment than Clear Secure. However, BASE is 2.9 times more volatile than Clear Secure. It trades about 0.22 of its potential returns per unit of risk. Clear Secure is currently generating about 0.07 per unit of risk. If you would invest  150.00  in BASE Inc on September 27, 2024 and sell it today you would earn a total of  44.00  from holding BASE Inc or generate 29.33% return on investment over 90 days.

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

BASE Inc  vs.  Clear Secure

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Clear Secure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Secure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BASE and Clear Secure

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

The idea behind BASE Inc and Clear Secure 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 Anywhere module to track or share privately all of your investments from the convenience of any device.