Correlation Between Veritone and Zapata Computing

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

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

Diversification Opportunities for Veritone and Zapata Computing

0.67

Correlation Coefficient

Veritone  Zapata Computing

Poor diversification

The 3 months correlation between Veritone and Zapata is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Veritone and Zapata Computing Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapata Computing Holdings and Veritone 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 Veritone are associated (or correlated) with Zapata Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapata Computing Holdings has no effect on the direction of Veritone i.e., Veritone and Zapata Computing go up and down completely randomly.

Pair Corralation between Veritone and Zapata Computing

Given the investment horizon of 90 days Veritone is expected to under-perform the Zapata Computing. But the stock apears to be less risky and, when comparing its historical volatility, Veritone is 15.39 times less risky than Zapata Computing. The stock trades about -0.04 of its potential returns per unit of risk. The Zapata Computing Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4.44  in Zapata Computing Holdings on September 13, 2024 and sell it today you would lose (3.88) from holding Zapata Computing Holdings or give up 87.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	53.97%
Values	Daily Returns

Veritone  vs.  Zapata Computing Holdings

Veritone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veritone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Zapata Computing Holdings

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Zapata Computing Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile basic indicators, Zapata Computing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veritone and Zapata Computing

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

The idea behind Veritone and Zapata Computing 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.