Correlation Between Paysafe and Canoo Holdings

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

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

Diversification Opportunities for Paysafe and Canoo Holdings

-0.42

Correlation Coefficient

Paysafe  Canoo Holdings

Very good diversification

The 3 months correlation between Paysafe and Canoo is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Paysafe Ltd Wt and Canoo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Holdings and Paysafe 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 Paysafe Ltd Wt are associated (or correlated) with Canoo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Holdings has no effect on the direction of Paysafe i.e., Paysafe and Canoo Holdings go up and down completely randomly.

Pair Corralation between Paysafe and Canoo Holdings

Assuming the 90 days trading horizon Paysafe Ltd Wt is expected to generate 1.29 times more return on investment than Canoo Holdings. However, Paysafe is 1.29 times more volatile than Canoo Holdings. It trades about 0.08 of its potential returns per unit of risk. Canoo Holdings is currently generating about -0.08 per unit of risk. If you would invest  2.50  in Paysafe Ltd Wt on August 30, 2024 and sell it today you would earn a total of  0.50  from holding Paysafe Ltd Wt or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Paysafe Ltd Wt  vs.  Canoo Holdings

Paysafe Ltd Wt

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paysafe Ltd Wt are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Paysafe unveiled solid returns over the last few months and may actually be approaching a breakup point.

Canoo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canoo Holdings 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 December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Paysafe and Canoo Holdings

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

The idea behind Paysafe Ltd Wt and Canoo Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.