Correlation Between ChargePoint Holdings and ODP Corp

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

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

Diversification Opportunities for ChargePoint Holdings and ODP Corp

0.24

Correlation Coefficient

ChargePoint Holdings  ODP Corp

Modest diversification

The 3 months correlation between ChargePoint and ODP is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ChargePoint Holdings and ODP Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODP Corp 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 ODP Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODP Corp has no effect on the direction of ChargePoint Holdings i.e., ChargePoint Holdings and ODP Corp go up and down completely randomly.

Pair Corralation between ChargePoint Holdings and ODP Corp

Given the investment horizon of 90 days ChargePoint Holdings is expected to generate 1.65 times more return on investment than ODP Corp. However, ChargePoint Holdings is 1.65 times more volatile than ODP Corp. It trades about -0.02 of its potential returns per unit of risk. ODP Corp is currently generating about -0.14 per unit of risk. If you would invest  206.00  in ChargePoint Holdings on February 17, 2024 and sell it today you would lose (20.00) from holding ChargePoint Holdings or give up 9.71% of portfolio value over 90 days.

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

ChargePoint Holdings  vs.  ODP Corp

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 comparatively stable basic indicators, ChargePoint Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ODP Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ODP Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ChargePoint Holdings and ODP Corp

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

The idea behind ChargePoint Holdings and ODP Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.