Correlation Between AA Mission and ESH Acquisition
Can any of the company-specific risk be diversified away by investing in both AA Mission and ESH Acquisition 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 AA Mission and ESH Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AA Mission Acquisition and ESH Acquisition Corp, you can compare the effects of market volatilities on AA Mission and ESH Acquisition 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 AA Mission with a short position of ESH Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of AA Mission and ESH Acquisition.
Diversification Opportunities for AA Mission and ESH Acquisition
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AAM and ESH is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding AA Mission Acquisition and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp and AA Mission 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 AA Mission Acquisition are associated (or correlated) with ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of AA Mission i.e., AA Mission and ESH Acquisition go up and down completely randomly.
Pair Corralation between AA Mission and ESH Acquisition
Considering the 90-day investment horizon AA Mission is expected to generate 9874.09 times less return on investment than ESH Acquisition. But when comparing it to its historical volatility, AA Mission Acquisition is 4218.9 times less risky than ESH Acquisition. It trades about 0.15 of its potential returns per unit of risk. ESH Acquisition Corp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 0.00 in ESH Acquisition Corp on August 31, 2024 and sell it today you would earn a total of 7.00 from holding ESH Acquisition Corp or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 19.64% |
| Values | Daily Returns |
AA Mission Acquisition vs. ESH Acquisition Corp
Performance |
| Timeline |
| AA Mission Acquisition |
| ESH Acquisition Corp |
AA Mission and ESH Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AA Mission and ESH Acquisition
The main advantage of trading using opposite AA Mission and ESH Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AA Mission position performs unexpectedly, ESH Acquisition 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 ESH Acquisition will offset losses from the drop in ESH Acquisition's long position.| AA Mission vs. Voyager Acquisition Corp | AA Mission vs. dMY Squared Technology | AA Mission vs. YHN Acquisition I | AA Mission vs. CO2 Energy Transition |
| ESH Acquisition vs. Lincoln Electric Holdings | ESH Acquisition vs. Weyco Group | ESH Acquisition vs. Vera Bradley | ESH Acquisition vs. Mid Atlantic Home Health |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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