Correlation Between Breeze Holdings and East Resources
Can any of the company-specific risk be diversified away by investing in both Breeze Holdings and East Resources 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 East Resources 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 East Resources Acquisition, you can compare the effects of market volatilities on Breeze Holdings and East Resources 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 East Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Breeze Holdings and East Resources.
Diversification Opportunities for Breeze Holdings and East Resources
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Breeze and East is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Breeze Holdings Acquisition and East Resources Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Resources Acqui 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 East Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Resources Acqui has no effect on the direction of Breeze Holdings i.e., Breeze Holdings and East Resources go up and down completely randomly.
Pair Corralation between Breeze Holdings and East Resources
Assuming the 90 days horizon Breeze Holdings is expected to generate 1.03 times less return on investment than East Resources. In addition to that, Breeze Holdings is 1.21 times more volatile than East Resources Acquisition. It trades about 0.12 of its total potential returns per unit of risk. East Resources Acquisition is currently generating about 0.15 per unit of volatility. If you would invest 5.58 in East Resources Acquisition on August 25, 2024 and sell it today you would earn a total of 22.42 from holding East Resources Acquisition or generate 401.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.05% |
| Values | Daily Returns |
Breeze Holdings Acquisition vs. East Resources Acquisition
Performance |
| Timeline |
| Breeze Holdings Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| East Resources Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Breeze Holdings and East Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Breeze Holdings and East Resources
The main advantage of trading using opposite Breeze Holdings and East Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Breeze Holdings position performs unexpectedly, East Resources 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 East Resources will offset losses from the drop in East Resources' long position.The idea behind Breeze Holdings Acquisition and East Resources Acquisition 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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