Correlation Between Embrace Change and Jaws Mustang
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Jaws Mustang 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 Embrace Change and Jaws Mustang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and Jaws Mustang Acquisition, you can compare the effects of market volatilities on Embrace Change and Jaws Mustang 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 Embrace Change with a short position of Jaws Mustang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Jaws Mustang.
Diversification Opportunities for Embrace Change and Jaws Mustang
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embrace and Jaws is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Jaws Mustang Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Mustang Acquisition and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Jaws Mustang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Mustang Acquisition has no effect on the direction of Embrace Change i.e., Embrace Change and Jaws Mustang go up and down completely randomly.
Pair Corralation between Embrace Change and Jaws Mustang
Given the investment horizon of 90 days Embrace Change Acquisition is expected to generate 1.13 times more return on investment than Jaws Mustang. However, Embrace Change is 1.13 times more volatile than Jaws Mustang Acquisition. It trades about 0.09 of its potential returns per unit of risk. Jaws Mustang Acquisition is currently generating about -0.43 per unit of risk. If you would invest 1,160 in Embrace Change Acquisition on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Embrace Change Acquisition or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 42.86% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Jaws Mustang Acquisition
Performance |
| Timeline |
| Embrace Change Acqui |
| Jaws Mustang Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Embrace Change and Jaws Mustang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Jaws Mustang
The main advantage of trading using opposite Embrace Change and Jaws Mustang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Jaws Mustang 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 Jaws Mustang will offset losses from the drop in Jaws Mustang's long position.| Embrace Change vs. China Health Management | Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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