Correlation Between Altitude Acquisition and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Altitude Acquisition and CF 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 Altitude Acquisition and CF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altitude Acquisition Corp and CF Acquisition Corp, you can compare the effects of market volatilities on Altitude Acquisition and CF 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 Altitude Acquisition with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altitude Acquisition and CF Acquisition.
Diversification Opportunities for Altitude Acquisition and CF Acquisition
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Altitude and CFIVU is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Altitude Acquisition Corp and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and Altitude Acquisition 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 Altitude Acquisition Corp are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Altitude Acquisition i.e., Altitude Acquisition and CF Acquisition go up and down completely randomly.
Pair Corralation between Altitude Acquisition and CF Acquisition
Assuming the 90 days horizon Altitude Acquisition is expected to generate 2.62 times less return on investment than CF Acquisition. But when comparing it to its historical volatility, Altitude Acquisition Corp is 2.11 times less risky than CF Acquisition. It trades about 0.02 of its potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,006 in CF Acquisition Corp on August 30, 2024 and sell it today you would earn a total of 35.00 from holding CF Acquisition Corp or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.7% |
| Values | Daily Returns |
Altitude Acquisition Corp vs. CF Acquisition Corp
Performance |
| Timeline |
| Altitude Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Altitude Acquisition and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altitude Acquisition and CF Acquisition
The main advantage of trading using opposite Altitude Acquisition and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altitude Acquisition position performs unexpectedly, CF 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.The idea behind Altitude Acquisition Corp and CF Acquisition Corp 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.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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