Correlation Between Corner Growth and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Corner Growth and CF 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 Corner Growth and CF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corner Growth Acquisition and CF Acquisition Corp, you can compare the effects of market volatilities on Corner Growth and CF 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 Corner Growth with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corner Growth and CF Acquisition.
Diversification Opportunities for Corner Growth and CF Acquisition
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Corner and CFIVU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Corner Growth Acquisition and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and Corner Growth 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 Corner Growth Acquisition are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Corner Growth i.e., Corner Growth and CF Acquisition go up and down completely randomly.
Pair Corralation between Corner Growth and CF Acquisition
Assuming the 90 days horizon Corner Growth Acquisition is expected to generate 1.95 times more return on investment than CF Acquisition. However, Corner Growth is 1.95 times more volatile than CF Acquisition Corp. It trades about 0.03 of its potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest 1,006 in Corner Growth Acquisition on October 23, 2024 and sell it today you would earn a total of 134.00 from holding Corner Growth Acquisition or generate 13.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 33.81% |
| Values | Daily Returns |
Corner Growth Acquisition vs. CF Acquisition Corp
Performance |
| Timeline |
| Corner Growth Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Corner Growth and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corner Growth and CF Acquisition
The main advantage of trading using opposite Corner Growth and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corner Growth position performs unexpectedly, CF 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.The idea behind Corner Growth Acquisition and CF 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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