Correlation Between Global Lights and Black Hawk
Can any of the company-specific risk be diversified away by investing in both Global Lights and Black Hawk 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 Global Lights and Black Hawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Lights Acquisition and Black Hawk Acquisition, you can compare the effects of market volatilities on Global Lights and Black Hawk 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 Global Lights with a short position of Black Hawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Lights and Black Hawk.
Diversification Opportunities for Global Lights and Black Hawk
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Black is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Global Lights Acquisition and Black Hawk Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hawk Acquisition and Global Lights 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 Global Lights Acquisition are associated (or correlated) with Black Hawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hawk Acquisition has no effect on the direction of Global Lights i.e., Global Lights and Black Hawk go up and down completely randomly.
Pair Corralation between Global Lights and Black Hawk
Given the investment horizon of 90 days Global Lights Acquisition is expected to generate 0.11 times more return on investment than Black Hawk. However, Global Lights Acquisition is 9.22 times less risky than Black Hawk. It trades about 0.19 of its potential returns per unit of risk. Black Hawk Acquisition is currently generating about 0.02 per unit of risk. If you would invest 1,042 in Global Lights Acquisition on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Global Lights Acquisition or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Lights Acquisition vs. Black Hawk Acquisition
Performance |
| Timeline |
| Global Lights Acquisition |
| Black Hawk Acquisition |
Global Lights and Black Hawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Lights and Black Hawk
The main advantage of trading using opposite Global Lights and Black Hawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Lights position performs unexpectedly, Black Hawk 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 Black Hawk will offset losses from the drop in Black Hawk's long position.| Global Lights vs. Visa Class A | Global Lights vs. Diamond Hill Investment | Global Lights vs. Distoken Acquisition | Global Lights vs. Associated Capital Group |
| Black Hawk vs. Voyager Acquisition Corp | Black Hawk vs. CO2 Energy Transition | Black Hawk vs. Vine Hill Capital | Black Hawk vs. DUET Acquisition 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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