Correlation Between Cricut and Red Cat

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

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

Diversification Opportunities for Cricut and Red Cat

0.48

Correlation Coefficient

Cricut  Red Cat

Very weak diversification

The 3 months correlation between Cricut and Red is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cricut Inc and Red Cat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Cat Holdings 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 Red Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Cat Holdings has no effect on the direction of Cricut i.e., Cricut and Red Cat go up and down completely randomly.

Pair Corralation between Cricut and Red Cat

Given the investment horizon of 90 days Cricut Inc is expected to generate 0.91 times more return on investment than Red Cat. However, Cricut Inc is 1.1 times less risky than Red Cat. It trades about 0.36 of its potential returns per unit of risk. Red Cat Holdings is currently generating about 0.31 per unit of risk. If you would invest  429.00  in Cricut Inc on February 21, 2025 and sell it today you would earn a total of  185.50  from holding Cricut Inc or generate 43.24% return on investment over 90 days.

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

Cricut Inc  vs.  Red Cat Holdings

Cricut Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cricut Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Cricut may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Red Cat Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Cat Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Red Cat is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cricut and Red Cat

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

The idea behind Cricut Inc and Red Cat 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.