Correlation Between East Resources and Breeze Holdings
Can any of the company-specific risk be diversified away by investing in both East Resources and Breeze Holdings 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 East Resources and Breeze Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Resources Acquisition and Breeze Holdings Acquisition, you can compare the effects of market volatilities on East Resources and Breeze Holdings 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 East Resources with a short position of Breeze Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Resources and Breeze Holdings.
Diversification Opportunities for East Resources and Breeze Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between East and Breeze is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding East Resources Acquisition and Breeze Holdings Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Breeze Holdings Acqu and East Resources 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 East Resources Acquisition are associated (or correlated) with Breeze Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Breeze Holdings Acqu has no effect on the direction of East Resources i.e., East Resources and Breeze Holdings go up and down completely randomly.
Pair Corralation between East Resources and Breeze Holdings
Assuming the 90 days horizon East Resources Acquisition is expected to generate 35.43 times more return on investment than Breeze Holdings. However, East Resources is 35.43 times more volatile than Breeze Holdings Acquisition. It trades about 0.12 of its potential returns per unit of risk. Breeze Holdings Acquisition is currently generating about 0.13 per unit of risk. If you would invest 10.00 in East Resources Acquisition on August 29, 2024 and sell it today you would earn a total of 18.00 from holding East Resources Acquisition or generate 180.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 87.18% |
| Values | Daily Returns |
East Resources Acquisition vs. Breeze Holdings Acquisition
Performance |
| Timeline |
| East Resources Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Breeze Holdings Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
East Resources and Breeze Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Resources and Breeze Holdings
The main advantage of trading using opposite East Resources and Breeze Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Resources position performs unexpectedly, Breeze Holdings 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 Breeze Holdings will offset losses from the drop in Breeze Holdings' long position.The idea behind East Resources Acquisition and Breeze Holdings Acquisition 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.| Breeze Holdings vs. Qomolangma Acquisition Corp | Breeze Holdings vs. Futuretech II Acquisition | Breeze Holdings vs. Patria Latin American |
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 Directory module to find actively traded commodities issued by global exchanges.
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