Correlation Between Stonebridge Acquisition and Solution Financial
Can any of the company-specific risk be diversified away by investing in both Stonebridge Acquisition and Solution Financial 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 Stonebridge Acquisition and Solution Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stonebridge Acquisition Corp and Solution Financial, you can compare the effects of market volatilities on Stonebridge Acquisition and Solution Financial 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 Stonebridge Acquisition with a short position of Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stonebridge Acquisition and Solution Financial.
Diversification Opportunities for Stonebridge Acquisition and Solution Financial
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stonebridge and Solution is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Stonebridge Acquisition Corp and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial and Stonebridge 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 Stonebridge Acquisition Corp are associated (or correlated) with Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of Stonebridge Acquisition i.e., Stonebridge Acquisition and Solution Financial go up and down completely randomly.
Pair Corralation between Stonebridge Acquisition and Solution Financial
Given the investment horizon of 90 days Stonebridge Acquisition Corp is expected to generate 0.08 times more return on investment than Solution Financial. However, Stonebridge Acquisition Corp is 12.91 times less risky than Solution Financial. It trades about 0.15 of its potential returns per unit of risk. Solution Financial is currently generating about 0.01 per unit of risk. If you would invest 1,048 in Stonebridge Acquisition Corp on August 27, 2024 and sell it today you would earn a total of 47.00 from holding Stonebridge Acquisition Corp or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 25.71% |
| Values | Daily Returns |
Stonebridge Acquisition Corp vs. Solution Financial
Performance |
| Timeline |
| Stonebridge Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Solution Financial |
Stonebridge Acquisition and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stonebridge Acquisition and Solution Financial
The main advantage of trading using opposite Stonebridge Acquisition and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stonebridge Acquisition position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial's long position.The idea behind Stonebridge Acquisition Corp and Solution Financial 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.| Solution Financial vs. United Rentals | Solution Financial vs. AerCap Holdings NV | Solution Financial vs. Fortress Transp Infra | Solution Financial vs. U Haul Holding |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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