Correlation Between EQRx and Prospector Capital

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

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

Diversification Opportunities for EQRx and Prospector Capital

0.0

Correlation Coefficient

EQRx  Prospector Capital

Pay attention - limited upside

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

Pair Corralation between EQRx and Prospector Capital

If you would invest (100.00) in Prospector Capital Equity on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Prospector Capital Equity or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EQRx Inc  vs.  Prospector Capital Equity

EQRx Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days EQRx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, EQRx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Prospector Capital Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prospector Capital Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Prospector Capital 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 EQRx and Prospector Capital

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

The idea behind EQRx Inc and Prospector Capital Equity 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.