Correlation Between Churchill Capital and L Catterton
Can any of the company-specific risk be diversified away by investing in both Churchill Capital and L Catterton 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 Churchill Capital and L Catterton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Churchill Capital VI and L Catterton Asia, you can compare the effects of market volatilities on Churchill Capital and L Catterton 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 Churchill Capital with a short position of L Catterton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Churchill Capital and L Catterton.
Diversification Opportunities for Churchill Capital and L Catterton
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Churchill and LCAA is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Churchill Capital VI and L Catterton Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Catterton Asia and Churchill Capital 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 Churchill Capital VI are associated (or correlated) with L Catterton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Catterton Asia has no effect on the direction of Churchill Capital i.e., Churchill Capital and L Catterton go up and down completely randomly.
Pair Corralation between Churchill Capital and L Catterton
Given the investment horizon of 90 days Churchill Capital is expected to generate 1.08 times less return on investment than L Catterton. In addition to that, Churchill Capital is 2.55 times more volatile than L Catterton Asia. It trades about 0.13 of its total potential returns per unit of risk. L Catterton Asia is currently generating about 0.37 per unit of volatility. If you would invest 1,039 in L Catterton Asia on August 31, 2024 and sell it today you would earn a total of 11.00 from holding L Catterton Asia or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Churchill Capital VI vs. L Catterton Asia
Performance |
| Timeline |
| Churchill Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| L Catterton Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Churchill Capital and L Catterton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Churchill Capital and L Catterton
The main advantage of trading using opposite Churchill Capital and L Catterton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Churchill Capital position performs unexpectedly, L Catterton 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 L Catterton will offset losses from the drop in L Catterton's long position.The idea behind Churchill Capital VI and L Catterton Asia 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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