Correlation Between Pagaya Technologies and Revelation Biosciences

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

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

Diversification Opportunities for Pagaya Technologies and Revelation Biosciences

-0.03

Correlation Coefficient

Pagaya Technologies  Revelation Biosciences

Good diversification

The 3 months correlation between Pagaya and Revelation is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Pagaya Technologies Ltd and Revelation Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revelation Biosciences and Pagaya 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 Pagaya Technologies Ltd are associated (or correlated) with Revelation Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revelation Biosciences has no effect on the direction of Pagaya Technologies i.e., Pagaya Technologies and Revelation Biosciences go up and down completely randomly.

Pair Corralation between Pagaya Technologies and Revelation Biosciences

Assuming the 90 days horizon Pagaya Technologies Ltd is expected to under-perform the Revelation Biosciences. In addition to that, Pagaya Technologies is 1.69 times more volatile than Revelation Biosciences. It trades about -0.04 of its total potential returns per unit of risk. Revelation Biosciences is currently generating about 0.06 per unit of volatility. If you would invest  1.19  in Revelation Biosciences on September 14, 2024 and sell it today you would earn a total of  0.11  from holding Revelation Biosciences or generate 9.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Pagaya Technologies Ltd  vs.  Revelation Biosciences

Pagaya Technologies

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Pagaya Technologies Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Revelation Biosciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Revelation Biosciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental drivers, Revelation Biosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pagaya Technologies and Revelation Biosciences

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

The idea behind Pagaya Technologies Ltd and Revelation Biosciences 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.