Correlation Between ChargePoint Holdings and Now

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

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

Diversification Opportunities for ChargePoint Holdings and Now

-0.55

Correlation Coefficient

ChargePoint Holdings  Now

Excellent diversification

The 3 months correlation between ChargePoint and Now is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ChargePoint Holdings and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and ChargePoint Holdings 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 ChargePoint Holdings are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of ChargePoint Holdings i.e., ChargePoint Holdings and Now go up and down completely randomly.

Pair Corralation between ChargePoint Holdings and Now

Given the investment horizon of 90 days ChargePoint Holdings is expected to generate 3.81 times more return on investment than Now. However, ChargePoint Holdings is 3.81 times more volatile than Now Inc. It trades about 0.03 of its potential returns per unit of risk. Now Inc is currently generating about -0.49 per unit of risk. If you would invest  115.00  in ChargePoint Holdings on September 27, 2024 and sell it today you would earn a total of  1.00  from holding ChargePoint Holdings or generate 0.87% return on investment over 90 days.

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

ChargePoint Holdings  vs.  Now Inc

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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.

Now Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Now Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Now is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ChargePoint Holdings and Now

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

The idea behind ChargePoint Holdings and Now Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.