Correlation Between ChargePoint Holdings and Twitter

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

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

Diversification Opportunities for ChargePoint Holdings and Twitter

-0.09

Correlation Coefficient

ChargePoint Holdings  Twitter

Good diversification

The 3 months correlation between ChargePoint and Twitter is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ChargePoint Holdings and Twitter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twitter and ChargePoint Holdings 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 ChargePoint Holdings are associated (or correlated) with Twitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twitter has no effect on the direction of ChargePoint Holdings i.e., ChargePoint Holdings and Twitter go up and down completely randomly.

Pair Corralation between ChargePoint Holdings and Twitter

Given the investment horizon of 90 days ChargePoint Holdings is expected to under-perform the Twitter. In addition to that, ChargePoint Holdings is 1.58 times more volatile than Twitter. It trades about -0.06 of its total potential returns per unit of risk. Twitter is currently generating about 0.11 per unit of volatility. If you would invest  3,956  in Twitter on February 24, 2024 and sell it today you would earn a total of  1,414  from holding Twitter or generate 35.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.61%
Values	Daily Returns

ChargePoint Holdings  vs.  Twitter

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Twitter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ChargePoint Holdings and Twitter

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

The idea behind ChargePoint Holdings and Twitter 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.