Correlation Between Edify Acquisition and A SPAC
Can any of the company-specific risk be diversified away by investing in both Edify Acquisition and A SPAC 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 Edify Acquisition and A SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edify Acquisition Corp and A SPAC I, you can compare the effects of market volatilities on Edify Acquisition and A SPAC 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 Edify Acquisition with a short position of A SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edify Acquisition and A SPAC.
Diversification Opportunities for Edify Acquisition and A SPAC
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Edify and ASCAW is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Edify Acquisition Corp and A SPAC I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC I and Edify 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 Edify Acquisition Corp are associated (or correlated) with A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC I has no effect on the direction of Edify Acquisition i.e., Edify Acquisition and A SPAC go up and down completely randomly.
Pair Corralation between Edify Acquisition and A SPAC
If you would invest 3.50 in A SPAC I on September 1, 2024 and sell it today you would earn a total of 0.00 from holding A SPAC I or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edify Acquisition Corp vs. A SPAC I
Performance |
| Timeline |
| Edify Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| A SPAC I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Edify Acquisition and A SPAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edify Acquisition and A SPAC
The main advantage of trading using opposite Edify Acquisition and A SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edify Acquisition position performs unexpectedly, A SPAC 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 A SPAC will offset losses from the drop in A SPAC's long position.The idea behind Edify Acquisition Corp and A SPAC I 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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