Correlation Between CF Acquisition and ARRWW Old
Can any of the company-specific risk be diversified away by investing in both CF Acquisition and ARRWW 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 ARRWW 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 ARRWW Old, you can compare the effects of market volatilities on CF Acquisition and ARRWW 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 ARRWW Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of CF Acquisition and ARRWW Old.
Diversification Opportunities for CF Acquisition and ARRWW Old
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CFIVW and ARRWW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CF Acquisition Corp and ARRWW Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARRWW 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 ARRWW Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARRWW Old has no effect on the direction of CF Acquisition i.e., CF Acquisition and ARRWW Old go up and down completely randomly.
Pair Corralation between CF Acquisition and ARRWW Old
Assuming the 90 days horizon CF Acquisition Corp is expected to generate 3.8 times more return on investment than ARRWW Old. However, CF Acquisition is 3.8 times more volatile than ARRWW Old. It trades about 0.09 of its potential returns per unit of risk. ARRWW Old is currently generating about 0.12 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 | 74.55% |
| Values | Daily Returns |
CF Acquisition Corp vs. ARRWW Old
Performance |
| Timeline |
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ARRWW Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CF Acquisition and ARRWW Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CF Acquisition and ARRWW Old
The main advantage of trading using opposite CF Acquisition and ARRWW Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CF Acquisition position performs unexpectedly, ARRWW 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 ARRWW Old will offset losses from the drop in ARRWW Old's long position.The idea behind CF Acquisition Corp and ARRWW 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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