Correlation Between Cactus Acquisition and International Luxury
Can any of the company-specific risk be diversified away by investing in both Cactus Acquisition and International Luxury 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 Cactus Acquisition and International Luxury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Acquisition Corp and International Luxury Products, you can compare the effects of market volatilities on Cactus Acquisition and International Luxury 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 Cactus Acquisition with a short position of International Luxury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus Acquisition and International Luxury.
Diversification Opportunities for Cactus Acquisition and International Luxury
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cactus and International is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Acquisition Corp and International Luxury Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Luxury and Cactus 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 Cactus Acquisition Corp are associated (or correlated) with International Luxury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Luxury has no effect on the direction of Cactus Acquisition i.e., Cactus Acquisition and International Luxury go up and down completely randomly.
Pair Corralation between Cactus Acquisition and International Luxury
Given the investment horizon of 90 days Cactus Acquisition Corp is expected to generate 0.41 times more return on investment than International Luxury. However, Cactus Acquisition Corp is 2.45 times less risky than International Luxury. It trades about 0.02 of its potential returns per unit of risk. International Luxury Products is currently generating about -0.02 per unit of risk. If you would invest 1,046 in Cactus Acquisition Corp on August 30, 2024 and sell it today you would earn a total of 93.00 from holding Cactus Acquisition Corp or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Acquisition Corp vs. International Luxury Products
Performance |
| Timeline |
| Cactus Acquisition Corp |
| International Luxury |
Cactus Acquisition and International Luxury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus Acquisition and International Luxury
The main advantage of trading using opposite Cactus Acquisition and International Luxury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus Acquisition position performs unexpectedly, International Luxury 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 International Luxury will offset losses from the drop in International Luxury's long position.The idea behind Cactus Acquisition Corp and International Luxury Products 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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