Correlation Between American Acquisition and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both American 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 American 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 American Acquisition Opportunity and CF Acquisition Corp, you can compare the effects of market volatilities on American 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 American Acquisition with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Acquisition and CF Acquisition.
Diversification Opportunities for American Acquisition and CF Acquisition
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and CFIVW is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding American Acquisition Opportuni 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 American 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 American Acquisition Opportunity 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 American Acquisition i.e., American Acquisition and CF Acquisition go up and down completely randomly.
Pair Corralation between American Acquisition and CF Acquisition
If you would invest 8.00 in CF Acquisition Corp on September 3, 2024 and sell it today you would earn a total of 0.00 from holding CF Acquisition Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Acquisition Opportuni vs. CF Acquisition Corp
Performance |
| Timeline |
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
American Acquisition and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Acquisition and CF Acquisition
The main advantage of trading using opposite American Acquisition and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American 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 American Acquisition Opportunity 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |