Correlation Between Red Cat and Rigetti Computing

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

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

Diversification Opportunities for Red Cat and Rigetti Computing

0.64

Correlation Coefficient

Red Cat  Rigetti Computing

Poor diversification

The 3 months correlation between Red and Rigetti is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Rigetti Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rigetti Computing and Red Cat 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 Red Cat Holdings are associated (or correlated) with Rigetti Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rigetti Computing has no effect on the direction of Red Cat i.e., Red Cat and Rigetti Computing go up and down completely randomly.

Pair Corralation between Red Cat and Rigetti Computing

Given the investment horizon of 90 days Red Cat Holdings is expected to under-perform the Rigetti Computing. But the stock apears to be less risky and, when comparing its historical volatility, Red Cat Holdings is 1.95 times less risky than Rigetti Computing. The stock trades about -0.16 of its potential returns per unit of risk. The Rigetti Computing is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,700  in Rigetti Computing on December 28, 2024 and sell it today you would lose (853.00) from holding Rigetti Computing or give up 50.18% of portfolio value over 90 days.

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

Red Cat Holdings  vs.  Rigetti Computing

Red Cat Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Cat Holdings 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rigetti Computing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rigetti Computing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Red Cat and Rigetti Computing

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

The idea behind Red Cat Holdings and Rigetti Computing 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.