Correlation Between Thayer Ventures and CEA Industries

Can any of the company-specific risk be diversified away by investing in both Thayer Ventures and CEA Industries 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 CEA Industries 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 CEA Industries, you can compare the effects of market volatilities on Thayer Ventures and CEA Industries 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 CEA Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thayer Ventures and CEA Industries.

Diversification Opportunities for Thayer Ventures and CEA Industries

-0.41

Correlation Coefficient

Thayer Ventures  CEA Industries

Very good diversification

The 3 months correlation between Thayer and CEA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Thayer Ventures Acquisition and CEA Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEA Industries 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 CEA Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEA Industries has no effect on the direction of Thayer Ventures i.e., Thayer Ventures and CEA Industries go up and down completely randomly.

Pair Corralation between Thayer Ventures and CEA Industries

Assuming the 90 days horizon Thayer Ventures is expected to generate 1.82 times less return on investment than CEA Industries. In addition to that, Thayer Ventures is 4.01 times more volatile than CEA Industries. It trades about 0.05 of its total potential returns per unit of risk. CEA Industries is currently generating about 0.34 per unit of volatility. If you would invest  600.00  in CEA Industries on September 23, 2024 and sell it today you would earn a total of  224.00  from holding CEA Industries or generate 37.33% return on investment over 90 days.

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

Thayer Ventures Acquisition  vs.  CEA Industries

Thayer Ventures Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thayer Ventures Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Thayer Ventures may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CEA Industries

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Thayer Ventures and CEA Industries

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

The idea behind Thayer Ventures Acquisition and CEA Industries 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.