Correlation Between Aldel Financial and Global Lights
Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Global Lights 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 Aldel Financial and Global Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and Global Lights Acquisition, you can compare the effects of market volatilities on Aldel Financial and Global Lights 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 Aldel Financial with a short position of Global Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Global Lights.
Diversification Opportunities for Aldel Financial and Global Lights
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aldel and Global is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Global Lights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Lights Acquisition and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Global Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Lights Acquisition has no effect on the direction of Aldel Financial i.e., Aldel Financial and Global Lights go up and down completely randomly.
Pair Corralation between Aldel Financial and Global Lights
Given the investment horizon of 90 days Aldel Financial is expected to generate 1729.05 times less return on investment than Global Lights. But when comparing it to its historical volatility, Aldel Financial II is 1865.06 times less risky than Global Lights. It trades about 0.22 of its potential returns per unit of risk. Global Lights Acquisition is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Global Lights Acquisition on December 12, 2024 and sell it today you would earn a total of 5.00 from holding Global Lights Acquisition or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 55.77% |
| Values | Daily Returns |
Aldel Financial II vs. Global Lights Acquisition
Performance |
| Timeline |
| Aldel Financial II |
| Global Lights Acquisition |
Aldel Financial and Global Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and Global Lights
The main advantage of trading using opposite Aldel Financial and Global Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, Global Lights 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 Global Lights will offset losses from the drop in Global Lights' long position.| Aldel Financial vs. ASML Holding NV | ||
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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