Correlation Between BurTech Acquisition and Mercato Partners
Can any of the company-specific risk be diversified away by investing in both BurTech Acquisition and Mercato Partners 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 BurTech Acquisition and Mercato Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BurTech Acquisition Corp and Mercato Partners Acquisition, you can compare the effects of market volatilities on BurTech Acquisition and Mercato Partners 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 BurTech Acquisition with a short position of Mercato Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of BurTech Acquisition and Mercato Partners.
Diversification Opportunities for BurTech Acquisition and Mercato Partners
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BurTech and Mercato is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding BurTech Acquisition Corp and Mercato Partners Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercato Partners Acq and BurTech 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 BurTech Acquisition Corp are associated (or correlated) with Mercato Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercato Partners Acq has no effect on the direction of BurTech Acquisition i.e., BurTech Acquisition and Mercato Partners go up and down completely randomly.
Pair Corralation between BurTech Acquisition and Mercato Partners
Assuming the 90 days horizon BurTech Acquisition is expected to generate 1.48 times less return on investment than Mercato Partners. In addition to that, BurTech Acquisition is 1.45 times more volatile than Mercato Partners Acquisition. It trades about 0.1 of its total potential returns per unit of risk. Mercato Partners Acquisition is currently generating about 0.21 per unit of volatility. If you would invest 0.90 in Mercato Partners Acquisition on August 30, 2024 and sell it today you would earn a total of 9.10 from holding Mercato Partners Acquisition or generate 1011.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 25.06% |
| Values | Daily Returns |
BurTech Acquisition Corp vs. Mercato Partners Acquisition
Performance |
| Timeline |
| BurTech Acquisition Corp |
| Mercato Partners Acq |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BurTech Acquisition and Mercato Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BurTech Acquisition and Mercato Partners
The main advantage of trading using opposite BurTech Acquisition and Mercato Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BurTech Acquisition position performs unexpectedly, Mercato Partners 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 Mercato Partners will offset losses from the drop in Mercato Partners' long position.The idea behind BurTech Acquisition Corp and Mercato Partners 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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