Correlation Between Breeze Holdings and American Acquisition
Can any of the company-specific risk be diversified away by investing in both Breeze Holdings and American 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 Breeze Holdings and American Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Breeze Holdings Acquisition and American Acquisition Opportunity, you can compare the effects of market volatilities on Breeze Holdings and American 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 Breeze Holdings with a short position of American Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Breeze Holdings and American Acquisition.
Diversification Opportunities for Breeze Holdings and American Acquisition
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Breeze and American is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Breeze Holdings Acquisition and American Acquisition Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Acquisition and Breeze Holdings 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 Breeze Holdings Acquisition are associated (or correlated) with American Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Acquisition has no effect on the direction of Breeze Holdings i.e., Breeze Holdings and American Acquisition go up and down completely randomly.
Pair Corralation between Breeze Holdings and American Acquisition
Assuming the 90 days horizon Breeze Holdings is expected to generate 2.11 times less return on investment than American Acquisition. But when comparing it to its historical volatility, Breeze Holdings Acquisition is 1.54 times less risky than American Acquisition. It trades about 0.12 of its potential returns per unit of risk. American Acquisition Opportunity is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2.01 in American Acquisition Opportunity on August 30, 2024 and sell it today you would earn a total of 0.99 from holding American Acquisition Opportunity or generate 49.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 39.46% |
| Values | Daily Returns |
Breeze Holdings Acquisition vs. American Acquisition Opportuni
Performance |
| Timeline |
| Breeze Holdings Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Breeze Holdings and American Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Breeze Holdings and American Acquisition
The main advantage of trading using opposite Breeze Holdings and American Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Breeze Holdings position performs unexpectedly, American 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 American Acquisition will offset losses from the drop in American Acquisition's long position.The idea behind Breeze Holdings Acquisition and American Acquisition Opportunity 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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