Correlation Between FUTURETECH and Golden Arrow
Can any of the company-specific risk be diversified away by investing in both FUTURETECH and Golden Arrow 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 FUTURETECH and Golden Arrow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FUTURETECH II ACQUISITION and Golden Arrow Merger, you can compare the effects of market volatilities on FUTURETECH and Golden Arrow 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 FUTURETECH with a short position of Golden Arrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of FUTURETECH and Golden Arrow.
Diversification Opportunities for FUTURETECH and Golden Arrow
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FUTURETECH and Golden is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FUTURETECH II ACQUISITION and Golden Arrow Merger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Arrow Merger and FUTURETECH 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 FUTURETECH II ACQUISITION are associated (or correlated) with Golden Arrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Arrow Merger has no effect on the direction of FUTURETECH i.e., FUTURETECH and Golden Arrow go up and down completely randomly.
Pair Corralation between FUTURETECH and Golden Arrow
Assuming the 90 days horizon FUTURETECH II ACQUISITION is expected to under-perform the Golden Arrow. But the stock apears to be less risky and, when comparing its historical volatility, FUTURETECH II ACQUISITION is 12.16 times less risky than Golden Arrow. The stock trades about -0.18 of its potential returns per unit of risk. The Golden Arrow Merger is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Golden Arrow Merger on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Golden Arrow Merger or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.67% |
| Values | Daily Returns |
FUTURETECH II ACQUISITION vs. Golden Arrow Merger
Performance |
| Timeline |
| FUTURETECH II ACQUISITION |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Golden Arrow Merger |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FUTURETECH and Golden Arrow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FUTURETECH and Golden Arrow
The main advantage of trading using opposite FUTURETECH and Golden Arrow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FUTURETECH position performs unexpectedly, Golden Arrow 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 Golden Arrow will offset losses from the drop in Golden Arrow's long position.The idea behind FUTURETECH II ACQUISITION and Golden Arrow Merger 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.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |