Correlation Between Cricut and DPCM Capital

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

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

Diversification Opportunities for Cricut and DPCM Capital

-0.42

Correlation Coefficient

Cricut  DPCM Capital

Very good diversification

The 3 months correlation between Cricut and DPCM is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cricut Inc and DPCM Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DPCM Capital and Cricut 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 Cricut Inc are associated (or correlated) with DPCM Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DPCM Capital has no effect on the direction of Cricut i.e., Cricut and DPCM Capital go up and down completely randomly.

Pair Corralation between Cricut and DPCM Capital

Given the investment horizon of 90 days Cricut Inc is expected to generate 1.34 times more return on investment than DPCM Capital. However, Cricut is 1.34 times more volatile than DPCM Capital. It trades about 0.15 of its potential returns per unit of risk. DPCM Capital is currently generating about -0.11 per unit of risk. If you would invest  475.00  in Cricut Inc on February 10, 2024 and sell it today you would earn a total of  230.00  from holding Cricut Inc or generate 48.42% return on investment over 90 days.

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

Cricut Inc  vs.  DPCM Capital

Cricut Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cricut Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Cricut unveiled solid returns over the last few months and may actually be approaching a breakup point.

DPCM Capital

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DPCM Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, DPCM Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cricut and DPCM Capital

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

The idea behind Cricut Inc and DPCM Capital 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.