Correlation Between Zapata Computing and Technology Fund

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

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

Diversification Opportunities for Zapata Computing and Technology Fund

-0.85

Correlation Coefficient

Zapata Computing  Technology Fund

Pay attention - limited upside

The 3 months correlation between Zapata and Technology is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Zapata Computing Holdings and Technology Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Fund Investor and Zapata Computing 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 Zapata Computing Holdings are associated (or correlated) with Technology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Fund Investor has no effect on the direction of Zapata Computing i.e., Zapata Computing and Technology Fund go up and down completely randomly.

Pair Corralation between Zapata Computing and Technology Fund

Assuming the 90 days horizon Zapata Computing Holdings is expected to generate 80.86 times more return on investment than Technology Fund. However, Zapata Computing is 80.86 times more volatile than Technology Fund Investor. It trades about 0.12 of its potential returns per unit of risk. Technology Fund Investor is currently generating about 0.19 per unit of risk. If you would invest  4.20  in Zapata Computing Holdings on September 3, 2024 and sell it today you would lose (3.64) from holding Zapata Computing Holdings or give up 86.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	64.06%
Values	Daily Returns

Zapata Computing Holdings  vs.  Technology Fund Investor

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 uncertain basic indicators, Zapata Computing showed solid returns over the last few months and may actually be approaching a breakup point.

Technology Fund Investor

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Fund Investor are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zapata Computing and Technology Fund

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

The idea behind Zapata Computing Holdings and Technology Fund Investor 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.