Correlation Between Embrace Change and Aimfinity Investment
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Aimfinity Investment 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 Aimfinity Investment 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 Aimfinity Investment I, you can compare the effects of market volatilities on Embrace Change and Aimfinity Investment 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 Aimfinity Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Aimfinity Investment.
Diversification Opportunities for Embrace Change and Aimfinity Investment
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Embrace and Aimfinity is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Aimfinity Investment I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimfinity Investment 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 Aimfinity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimfinity Investment has no effect on the direction of Embrace Change i.e., Embrace Change and Aimfinity Investment go up and down completely randomly.
Pair Corralation between Embrace Change and Aimfinity Investment
Assuming the 90 days horizon Embrace Change is expected to generate 1.38 times less return on investment than Aimfinity Investment. But when comparing it to its historical volatility, Embrace Change Acquisition is 1.42 times less risky than Aimfinity Investment. It trades about 0.04 of its potential returns per unit of risk. Aimfinity Investment I is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in Aimfinity Investment I on August 27, 2024 and sell it today you would earn a total of 180.00 from holding Aimfinity Investment I or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Aimfinity Investment I
Performance |
| Timeline |
| Embrace Change Acqui |
| Aimfinity Investment |
Embrace Change and Aimfinity Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Aimfinity Investment
The main advantage of trading using opposite Embrace Change and Aimfinity Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Aimfinity Investment 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 Aimfinity Investment will offset losses from the drop in Aimfinity Investment's long position.| Embrace Change vs. PowerUp Acquisition Corp | Embrace Change vs. Aurora Innovation | Embrace Change vs. HUMANA INC | Embrace Change vs. Aquagold International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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