Correlation Between Piper Sandler and Netcapital

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

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

Diversification Opportunities for Piper Sandler and Netcapital

0.49

Correlation Coefficient

Piper Sandler  Netcapital

Very weak diversification

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

Pair Corralation between Piper Sandler and Netcapital

Given the investment horizon of 90 days Piper Sandler Companies is expected to generate 0.53 times more return on investment than Netcapital. However, Piper Sandler Companies is 1.9 times less risky than Netcapital. It trades about -0.13 of its potential returns per unit of risk. Netcapital is currently generating about -0.07 per unit of risk. 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

Piper Sandler Companies  vs.  Netcapital

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.

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.

Pair Trading with Piper Sandler and Netcapital

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

The idea behind Piper Sandler Companies and Netcapital 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.