Correlation Between Netcapital and Piper Sandler

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

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

Diversification Opportunities for Netcapital and Piper Sandler

0.49

Correlation Coefficient

Netcapital  Piper Sandler

Very weak diversification

The 3 months correlation between Netcapital and Piper is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital and Piper Sandler Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piper Sandler Companies and Netcapital 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 Netcapital are associated (or correlated) with Piper Sandler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piper Sandler Companies has no effect on the direction of Netcapital i.e., Netcapital and Piper Sandler go up and down completely randomly.

Pair Corralation between Netcapital and Piper Sandler

Given the investment horizon of 90 days Netcapital is expected to under-perform the Piper Sandler. In addition to that, Netcapital is 1.9 times more volatile than Piper Sandler Companies. It trades about -0.07 of its total potential returns per unit of risk. Piper Sandler Companies is currently generating about -0.13 per unit of volatility. If you would invest  29,417  in Piper Sandler Companies on December 30, 2024 and sell it today you would lose (4,668) from holding Piper Sandler Companies or give up 15.87% of portfolio value over 90 days.

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

Netcapital  vs.  Piper Sandler Companies

Netcapital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Netcapital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Piper Sandler Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Piper Sandler Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Netcapital and Piper Sandler

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

The idea behind Netcapital and Piper Sandler Companies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..