Correlation Between Aura FAT and Redwoods Acquisition
Can any of the company-specific risk be diversified away by investing in both Aura FAT and Redwoods 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 Aura FAT and Redwoods Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura FAT Projects and Redwoods Acquisition Corp, you can compare the effects of market volatilities on Aura FAT and Redwoods 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 Aura FAT with a short position of Redwoods Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura FAT and Redwoods Acquisition.
Diversification Opportunities for Aura FAT and Redwoods Acquisition
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aura and Redwoods is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aura FAT Projects and Redwoods Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwoods Acquisition Corp and Aura FAT 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 Aura FAT Projects are associated (or correlated) with Redwoods Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwoods Acquisition Corp has no effect on the direction of Aura FAT i.e., Aura FAT and Redwoods Acquisition go up and down completely randomly.
Pair Corralation between Aura FAT and Redwoods Acquisition
Assuming the 90 days horizon Aura FAT Projects is expected to generate 0.35 times more return on investment than Redwoods Acquisition. However, Aura FAT Projects is 2.86 times less risky than Redwoods Acquisition. It trades about 0.05 of its potential returns per unit of risk. Redwoods Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest 1,015 in Aura FAT Projects on August 24, 2024 and sell it today you would earn a total of 259.00 from holding Aura FAT Projects or generate 25.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 87.61% |
| Values | Daily Returns |
Aura FAT Projects vs. Redwoods Acquisition Corp
Performance |
| Timeline |
| Aura FAT Projects |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Redwoods Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aura FAT and Redwoods Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aura FAT and Redwoods Acquisition
The main advantage of trading using opposite Aura FAT and Redwoods Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura FAT position performs unexpectedly, Redwoods 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 Redwoods Acquisition will offset losses from the drop in Redwoods Acquisition's long position.| Aura FAT vs. Embrace Change Acquisition | Aura FAT vs. Denali Capital Acquisition | Aura FAT vs. Aimfinity Investment I |
| Redwoods Acquisition vs. Metal Sky Star | Redwoods Acquisition vs. Rf Acquisition Corp | Redwoods Acquisition vs. Patria Latin American |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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