Correlation Between Cascadia Acquisition and TKB Critical
Can any of the company-specific risk be diversified away by investing in both Cascadia Acquisition and TKB Critical 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 Cascadia Acquisition and TKB Critical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cascadia Acquisition Corp and TKB Critical Technologies, you can compare the effects of market volatilities on Cascadia Acquisition and TKB Critical 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 Cascadia Acquisition with a short position of TKB Critical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cascadia Acquisition and TKB Critical.
Diversification Opportunities for Cascadia Acquisition and TKB Critical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cascadia and TKB is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cascadia Acquisition Corp and TKB Critical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKB Critical Technologies and Cascadia 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 Cascadia Acquisition Corp are associated (or correlated) with TKB Critical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKB Critical Technologies has no effect on the direction of Cascadia Acquisition i.e., Cascadia Acquisition and TKB Critical go up and down completely randomly.
Pair Corralation between Cascadia Acquisition and TKB Critical
Assuming the 90 days horizon Cascadia Acquisition is expected to generate 3.05 times less return on investment than TKB Critical. But when comparing it to its historical volatility, Cascadia Acquisition Corp is 4.6 times less risky than TKB Critical. It trades about 0.19 of its potential returns per unit of risk. TKB Critical Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2.99 in TKB Critical Technologies on September 1, 2024 and sell it today you would lose (1.89) from holding TKB Critical Technologies or give up 63.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 19.29% |
| Values | Daily Returns |
Cascadia Acquisition Corp vs. TKB Critical Technologies
Performance |
| Timeline |
| Cascadia Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TKB Critical Technologies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cascadia Acquisition and TKB Critical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cascadia Acquisition and TKB Critical
The main advantage of trading using opposite Cascadia Acquisition and TKB Critical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cascadia Acquisition position performs unexpectedly, TKB Critical 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 TKB Critical will offset losses from the drop in TKB Critical's long position.The idea behind Cascadia Acquisition Corp and TKB Critical Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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