Correlation Between Remitly Global and Pagaya Technologies

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

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

Diversification Opportunities for Remitly Global and Pagaya Technologies

0.29

Correlation Coefficient

Remitly Global  Pagaya Technologies

Modest diversification

The 3 months correlation between Remitly and Pagaya is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Remitly Global and Pagaya Technologies Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies and Remitly Global 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 Remitly Global are associated (or correlated) with Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of Remitly Global i.e., Remitly Global and Pagaya Technologies go up and down completely randomly.

Pair Corralation between Remitly Global and Pagaya Technologies

Given the investment horizon of 90 days Remitly Global is expected to generate 0.28 times more return on investment than Pagaya Technologies. However, Remitly Global is 3.54 times less risky than Pagaya Technologies. It trades about 0.24 of its potential returns per unit of risk. Pagaya Technologies Ltd is currently generating about 0.04 per unit of risk. If you would invest  1,344  in Remitly Global on October 3, 2024 and sell it today you would earn a total of  913.00  from holding Remitly Global or generate 67.93% return on investment over 90 days.

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

Remitly Global  vs.  Pagaya Technologies Ltd

Remitly Global

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Remitly Global are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Remitly Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pagaya Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pagaya Technologies Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Pagaya Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Remitly Global and Pagaya Technologies

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

The idea behind Remitly Global and Pagaya Technologies Ltd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.