Correlation Between ESGEN Acquisition and Kernel Group
Can any of the company-specific risk be diversified away by investing in both ESGEN Acquisition and Kernel Group 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 ESGEN Acquisition and Kernel Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESGEN Acquisition Corp and Kernel Group Holdings, you can compare the effects of market volatilities on ESGEN Acquisition and Kernel Group 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 ESGEN Acquisition with a short position of Kernel Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGEN Acquisition and Kernel Group.
Diversification Opportunities for ESGEN Acquisition and Kernel Group
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between ESGEN and Kernel is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ESGEN Acquisition Corp and Kernel Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kernel Group Holdings and ESGEN 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 ESGEN Acquisition Corp are associated (or correlated) with Kernel Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kernel Group Holdings has no effect on the direction of ESGEN Acquisition i.e., ESGEN Acquisition and Kernel Group go up and down completely randomly.
Pair Corralation between ESGEN Acquisition and Kernel Group
Assuming the 90 days horizon ESGEN Acquisition Corp is expected to generate 0.43 times more return on investment than Kernel Group. However, ESGEN Acquisition Corp is 2.34 times less risky than Kernel Group. It trades about 0.06 of its potential returns per unit of risk. Kernel Group Holdings is currently generating about 0.02 per unit of risk. If you would invest 1,027 in ESGEN Acquisition Corp on September 3, 2024 and sell it today you would earn a total of 74.00 from holding ESGEN Acquisition Corp or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 36.96% |
| Values | Daily Returns |
ESGEN Acquisition Corp vs. Kernel Group Holdings
Performance |
| Timeline |
| ESGEN Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kernel Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ESGEN Acquisition and Kernel Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESGEN Acquisition and Kernel Group
The main advantage of trading using opposite ESGEN Acquisition and Kernel Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESGEN Acquisition position performs unexpectedly, Kernel Group 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 Kernel Group will offset losses from the drop in Kernel Group's long position.| ESGEN Acquisition vs. Microbot Medical | ESGEN Acquisition vs. Skechers USA | ESGEN Acquisition vs. Merit Medical Systems | ESGEN Acquisition vs. PVH Corp |
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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