Correlation Between PureCycle Technologies and Texas Rare

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

By analyzing existing cross correlation between PureCycle Technologies and Texas Rare Earth, you can compare the effects of market volatilities on PureCycle Technologies and Texas Rare 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 PureCycle Technologies with a short position of Texas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureCycle Technologies and Texas Rare.

Diversification Opportunities for PureCycle Technologies and Texas Rare

-0.79

Correlation Coefficient

PureCycle Technologies  Texas Rare

Pay attention - limited upside

The 3 months correlation between PureCycle and Texas is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding PureCycle Technologies and Texas Rare Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Rare Earth and PureCycle Technologies 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 PureCycle Technologies are associated (or correlated) with Texas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Rare Earth has no effect on the direction of PureCycle Technologies i.e., PureCycle Technologies and Texas Rare go up and down completely randomly.

Pair Corralation between PureCycle Technologies and Texas Rare

Assuming the 90 days horizon PureCycle Technologies is expected to under-perform the Texas Rare. In addition to that, PureCycle Technologies is 1.06 times more volatile than Texas Rare Earth. It trades about -0.1 of its total potential returns per unit of risk. Texas Rare Earth is currently generating about 0.16 per unit of volatility. If you would invest  25.00  in Texas Rare Earth on December 29, 2024 and sell it today you would earn a total of  21.00  from holding Texas Rare Earth or generate 84.0% return on investment over 90 days.

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

PureCycle Technologies  vs.  Texas Rare Earth

PureCycle Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days PureCycle Technologies 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 fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Texas Rare Earth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Texas Rare Earth are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Texas Rare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PureCycle Technologies and Texas Rare

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

The idea behind PureCycle Technologies and Texas Rare Earth 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.