Correlation Between Associated Capital and Legato Merger
Can any of the company-specific risk be diversified away by investing in both Associated Capital and Legato Merger 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 Associated Capital and Legato Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and Legato Merger Corp, you can compare the effects of market volatilities on Associated Capital and Legato Merger 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 Associated Capital with a short position of Legato Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Legato Merger.
Diversification Opportunities for Associated Capital and Legato Merger
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and Legato is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Legato Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legato Merger Corp and Associated Capital 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 Associated Capital Group are associated (or correlated) with Legato Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legato Merger Corp has no effect on the direction of Associated Capital i.e., Associated Capital and Legato Merger go up and down completely randomly.
Pair Corralation between Associated Capital and Legato Merger
Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 19.12 times more return on investment than Legato Merger. However, Associated Capital is 19.12 times more volatile than Legato Merger Corp. It trades about 0.05 of its potential returns per unit of risk. Legato Merger Corp is currently generating about 0.14 per unit of risk. If you would invest 3,290 in Associated Capital Group on September 1, 2024 and sell it today you would earn a total of 339.00 from holding Associated Capital Group or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. Legato Merger Corp
Performance |
| Timeline |
| Associated Capital |
| Legato Merger Corp |
Associated Capital and Legato Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and Legato Merger
The main advantage of trading using opposite Associated Capital and Legato Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Legato Merger 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 Legato Merger will offset losses from the drop in Legato Merger's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
| Legato Merger vs. Visa Class A | Legato Merger vs. Diamond Hill Investment | Legato Merger vs. Distoken Acquisition | Legato Merger vs. AllianceBernstein Holding LP |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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