Correlation Between CF Acquisition and Power Digital
Can any of the company-specific risk be diversified away by investing in both CF Acquisition and Power Digital 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 Power Digital 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 Power Digital Infrastructure, you can compare the effects of market volatilities on CF Acquisition and Power Digital 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 Power Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and Power Digital.
Diversification Opportunities for CF Acquisition and Power Digital
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CFFSU and Power is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition VII and Power Digital Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Digital Infras 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 Power Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Digital Infras has no effect on the direction of CF Acquisition i.e., CF Acquisition and Power Digital go up and down completely randomly.
Pair Corralation between CF Acquisition and Power Digital
Assuming the 90 days horizon CF Acquisition is expected to generate 1.69 times less return on investment than Power Digital. But when comparing it to its historical volatility, CF Acquisition VII is 1.28 times less risky than Power Digital. It trades about 0.05 of its potential returns per unit of risk. Power Digital Infrastructure is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,003 in Power Digital Infrastructure on August 30, 2024 and sell it today you would earn a total of 48.00 from holding Power Digital Infrastructure or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 30.51% |
| Values | Daily Returns |
CF Acquisition VII vs. Power Digital Infrastructure
Performance |
| Timeline |
| CF Acquisition VII |
| Power Digital Infras |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CF Acquisition and Power Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Acquisition and Power Digital
The main advantage of trading using opposite CF Acquisition and Power Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition position performs unexpectedly, Power Digital 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 Power Digital will offset losses from the drop in Power Digital's long position.| CF Acquisition vs. Patria Latin American | CF Acquisition vs. ABIVAX Socit Anonyme | CF Acquisition vs. Pinnacle Sherman Multi Strategy | CF Acquisition vs. Morningstar Unconstrained Allocation |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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