Correlation Between CF Acquisition and Evergreen Corp
Can any of the company-specific risk be diversified away by investing in both CF Acquisition and Evergreen Corp 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 CF Acquisition and Evergreen Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Acquisition VII and Evergreen Corp, you can compare the effects of market volatilities on CF Acquisition and Evergreen Corp 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 CF Acquisition with a short position of Evergreen Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and Evergreen Corp.
Diversification Opportunities for CF Acquisition and Evergreen Corp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CFFS and Evergreen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition VII and Evergreen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Corp and CF 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 CF Acquisition VII are associated (or correlated) with Evergreen Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Corp has no effect on the direction of CF Acquisition i.e., CF Acquisition and Evergreen Corp go up and down completely randomly.
Pair Corralation between CF Acquisition and Evergreen Corp
Given the investment horizon of 90 days CF Acquisition is expected to generate 1.45 times less return on investment than Evergreen Corp. In addition to that, CF Acquisition is 1.33 times more volatile than Evergreen Corp. It trades about 0.08 of its total potential returns per unit of risk. Evergreen Corp is currently generating about 0.15 per unit of volatility. If you would invest 1,068 in Evergreen Corp on September 2, 2024 and sell it today you would earn a total of 113.00 from holding Evergreen Corp or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CF Acquisition VII vs. Evergreen Corp
Performance |
| Timeline |
| CF Acquisition VII |
| Evergreen Corp |
CF Acquisition and Evergreen Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Acquisition and Evergreen Corp
The main advantage of trading using opposite CF Acquisition and Evergreen Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition position performs unexpectedly, Evergreen Corp 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 Evergreen Corp will offset losses from the drop in Evergreen Corp's long position.The idea behind CF Acquisition VII and Evergreen Corp 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.| Evergreen Corp vs. Finnovate Acquisition Corp | Evergreen Corp vs. IX Acquisition Corp | Evergreen Corp vs. LatAmGrowth SPAC | Evergreen Corp vs. Denali Capital Acquisition |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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