Correlation Between Embark Technology and Thayer Ventures

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

By analyzing existing cross correlation between Embark Technology Warrants and Thayer Ventures Acquisition, you can compare the effects of market volatilities on Embark Technology and Thayer Ventures 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 Embark Technology with a short position of Thayer Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Technology and Thayer Ventures.

Diversification Opportunities for Embark Technology and Thayer Ventures

0.0

Correlation Coefficient

Embark Technology  Thayer Ventures

Pay attention - limited upside

The 3 months correlation between Embark and Thayer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Embark Technology Warrants and Thayer Ventures Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thayer Ventures Acqu and Embark Technology 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 Embark Technology Warrants are associated (or correlated) with Thayer Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thayer Ventures Acqu has no effect on the direction of Embark Technology i.e., Embark Technology and Thayer Ventures go up and down completely randomly.

Pair Corralation between Embark Technology and Thayer Ventures

Assuming the 90 days horizon Embark Technology is expected to generate 6.17 times less return on investment than Thayer Ventures. But when comparing it to its historical volatility, Embark Technology Warrants is 1.54 times less risky than Thayer Ventures. It trades about 0.02 of its potential returns per unit of risk. Thayer Ventures Acquisition is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Thayer Ventures Acquisition on October 11, 2024 and sell it today you would lose (4.44) from holding Thayer Ventures Acquisition or give up 74.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	22.38%
Values	Daily Returns

Embark Technology Warrants  vs.  Thayer Ventures Acquisition

Embark Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embark Technology Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking signals, Embark Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Thayer Ventures Acqu

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thayer Ventures Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Thayer Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embark Technology and Thayer Ventures

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

The idea behind Embark Technology Warrants and Thayer Ventures 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.