Correlation Between Freedom Acquisition and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Freedom Acquisition and CF Acquisition 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 Freedom Acquisition and CF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Acquisition I and CF Acquisition Corp, you can compare the effects of market volatilities on Freedom Acquisition and CF Acquisition 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 Freedom Acquisition with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Acquisition and CF Acquisition.
Diversification Opportunities for Freedom Acquisition and CF Acquisition
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Freedom and CFFE is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Acquisition I and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and Freedom 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 Freedom Acquisition I are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Freedom Acquisition i.e., Freedom Acquisition and CF Acquisition go up and down completely randomly.
Pair Corralation between Freedom Acquisition and CF Acquisition
Given the investment horizon of 90 days Freedom Acquisition I is expected to under-perform the CF Acquisition. In addition to that, Freedom Acquisition is 20.85 times more volatile than CF Acquisition Corp. It trades about -0.06 of its total potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.13 per unit of volatility. If you would invest 1,036 in CF Acquisition Corp on September 3, 2024 and sell it today you would earn a total of 44.00 from holding CF Acquisition Corp or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.39% |
| Values | Daily Returns |
Freedom Acquisition I vs. CF Acquisition Corp
Performance |
| Timeline |
| Freedom Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Freedom Acquisition and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Acquisition and CF Acquisition
The main advantage of trading using opposite Freedom Acquisition and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Acquisition position performs unexpectedly, CF Acquisition 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.| Freedom Acquisition vs. Everest Consolidator Acquisition | Freedom Acquisition vs. Valuence Merger 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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