Correlation Between Thayer Ventures and Aware

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

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

Diversification Opportunities for Thayer Ventures and Aware

0.4

Correlation Coefficient

Thayer Ventures  Aware

Very weak diversification

The 3 months correlation between Thayer and Aware is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Thayer Ventures Acquisition and Aware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aware Inc and Thayer Ventures 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 Thayer Ventures Acquisition are associated (or correlated) with Aware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aware Inc has no effect on the direction of Thayer Ventures i.e., Thayer Ventures and Aware go up and down completely randomly.

Pair Corralation between Thayer Ventures and Aware

Assuming the 90 days horizon Thayer Ventures Acquisition is expected to generate 6.09 times more return on investment than Aware. However, Thayer Ventures is 6.09 times more volatile than Aware Inc. It trades about 0.03 of its potential returns per unit of risk. Aware Inc is currently generating about 0.03 per unit of risk. If you would invest  1.50  in Thayer Ventures Acquisition on September 15, 2024 and sell it today you would lose (0.50) from holding Thayer Ventures Acquisition or give up 33.33% of portfolio value over 90 days.

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

Thayer Ventures Acquisition  vs.  Aware Inc

Thayer Ventures Acqu

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thayer Ventures Acquisition are ranked lower than 6 (%) 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.

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Thayer Ventures and Aware

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

The idea behind Thayer Ventures Acquisition and Aware 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.