Correlation Between CF Acquisition and Altitude Acquisition
Can any of the company-specific risk be diversified away by investing in both CF Acquisition and Altitude Acquisition 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 Altitude Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CF Acquisition Corp and Altitude Acquisition Corp, you can compare the effects of market volatilities on CF Acquisition and Altitude Acquisition 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 Altitude Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and Altitude Acquisition.
Diversification Opportunities for CF Acquisition and Altitude Acquisition
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CFIVU and Altitude is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition Corp and Altitude Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altitude Acquisition 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 Corp are associated (or correlated) with Altitude Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altitude Acquisition Corp has no effect on the direction of CF Acquisition i.e., CF Acquisition and Altitude Acquisition go up and down completely randomly.
Pair Corralation between CF Acquisition and Altitude Acquisition
Assuming the 90 days horizon CF Acquisition Corp is expected to generate 2.11 times more return on investment than Altitude Acquisition. However, CF Acquisition is 2.11 times more volatile than Altitude Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. Altitude Acquisition Corp is currently generating about 0.02 per unit of risk. If you would invest 1,006 in CF Acquisition Corp on August 30, 2024 and sell it today you would earn a total of 35.00 from holding CF Acquisition Corp or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.7% |
| Values | Daily Returns |
CF Acquisition Corp vs. Altitude Acquisition Corp
Performance |
| Timeline |
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Altitude Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CF Acquisition and Altitude Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Acquisition and Altitude Acquisition
The main advantage of trading using opposite CF Acquisition and Altitude Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition position performs unexpectedly, Altitude Acquisition 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 Altitude Acquisition will offset losses from the drop in Altitude Acquisition's long position.The idea behind CF Acquisition Corp and Altitude Acquisition 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.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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