Correlation Between CF Acquisition and APACW Old
Can any of the company-specific risk be diversified away by investing in both CF Acquisition and APACW Old 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 APACW Old 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 APACW Old, you can compare the effects of market volatilities on CF Acquisition and APACW Old 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 APACW Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and APACW Old.
Diversification Opportunities for CF Acquisition and APACW Old
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CFIVW and APACW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition Corp and APACW Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APACW Old 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 APACW Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APACW Old has no effect on the direction of CF Acquisition i.e., CF Acquisition and APACW Old go up and down completely randomly.
Pair Corralation between CF Acquisition and APACW Old
Assuming the 90 days horizon CF Acquisition Corp is expected to generate 3.34 times more return on investment than APACW Old. However, CF Acquisition is 3.34 times more volatile than APACW Old. It trades about 0.09 of its potential returns per unit of risk. APACW Old is currently generating about 0.01 per unit of risk. If you would invest 10.00 in CF Acquisition Corp on November 5, 2024 and sell it today you would lose (2.00) from holding CF Acquisition Corp or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
CF Acquisition Corp vs. APACW Old
Performance |
| Timeline |
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| APACW Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CF Acquisition and APACW Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Acquisition and APACW Old
The main advantage of trading using opposite CF Acquisition and APACW Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition position performs unexpectedly, APACW Old 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 APACW Old will offset losses from the drop in APACW Old's long position.The idea behind CF Acquisition Corp and APACW Old 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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