Correlation Between A SPAC and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both A SPAC and Plum 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 A SPAC and Plum Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A SPAC II and Plum Acquisition Corp, you can compare the effects of market volatilities on A SPAC and Plum 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 A SPAC with a short position of Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of A SPAC and Plum Acquisition.
Diversification Opportunities for A SPAC and Plum Acquisition
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ASCB and Plum is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding A SPAC II and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and A SPAC 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 A SPAC II are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of A SPAC i.e., A SPAC and Plum Acquisition go up and down completely randomly.
Pair Corralation between A SPAC and Plum Acquisition
Given the investment horizon of 90 days A SPAC is expected to generate 861.16 times less return on investment than Plum Acquisition. But when comparing it to its historical volatility, A SPAC II is 122.27 times less risky than Plum Acquisition. It trades about 0.02 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4.37 in Plum Acquisition Corp on September 3, 2024 and sell it today you would earn a total of 20.63 from holding Plum Acquisition Corp or generate 472.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.06% |
| Values | Daily Returns |
A SPAC II vs. Plum Acquisition Corp
Performance |
| Timeline |
| A SPAC II |
| Plum Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
A SPAC and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A SPAC and Plum Acquisition
The main advantage of trading using opposite A SPAC and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A SPAC position performs unexpectedly, Plum 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.| A SPAC vs. Western Asset Global | A SPAC vs. Invesco Trust For | A SPAC vs. Logan Ridge Finance | A SPAC vs. Invesco Advantage MIT |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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