Correlation Between Bridgetown Holdings and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Bridgetown Holdings and CF 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 Bridgetown Holdings and CF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridgetown Holdings and CF Acquisition Corp, you can compare the effects of market volatilities on Bridgetown Holdings and CF 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 Bridgetown Holdings with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridgetown Holdings and CF Acquisition.
Diversification Opportunities for Bridgetown Holdings and CF Acquisition
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bridgetown and CFIVU is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bridgetown Holdings and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and Bridgetown 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 Bridgetown Holdings are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Bridgetown Holdings i.e., Bridgetown Holdings and CF Acquisition go up and down completely randomly.
Pair Corralation between Bridgetown Holdings and CF Acquisition
Assuming the 90 days horizon Bridgetown Holdings is expected to generate 13.63 times more return on investment than CF Acquisition. However, Bridgetown Holdings is 13.63 times more volatile than CF Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest 28.00 in Bridgetown Holdings on October 10, 2024 and sell it today you would lose (7.00) from holding Bridgetown Holdings or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridgetown Holdings vs. CF Acquisition Corp
Performance |
| Timeline |
| Bridgetown Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bridgetown Holdings and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridgetown Holdings and CF Acquisition
The main advantage of trading using opposite Bridgetown Holdings and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridgetown Holdings position performs unexpectedly, CF 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.| Bridgetown Holdings vs. RBC Bearings Incorporated | Bridgetown Holdings vs. Black Spade Acquisition | Bridgetown Holdings vs. Lincoln Electric Holdings | Bridgetown Holdings vs. Timken Company |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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