Correlation Between Jaws Mustang and CC Neuberger
Can any of the company-specific risk be diversified away by investing in both Jaws Mustang and CC Neuberger 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 Jaws Mustang and CC Neuberger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jaws Mustang Acquisition and CC Neuberger Principal, you can compare the effects of market volatilities on Jaws Mustang and CC Neuberger 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 Jaws Mustang with a short position of CC Neuberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaws Mustang and CC Neuberger.
Diversification Opportunities for Jaws Mustang and CC Neuberger
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jaws and PRPC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Jaws Mustang Acquisition and CC Neuberger Principal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CC Neuberger Principal and Jaws Mustang 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 Jaws Mustang Acquisition are associated (or correlated) with CC Neuberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CC Neuberger Principal has no effect on the direction of Jaws Mustang i.e., Jaws Mustang and CC Neuberger go up and down completely randomly.
Pair Corralation between Jaws Mustang and CC Neuberger
Given the investment horizon of 90 days Jaws Mustang is expected to generate 2.88 times less return on investment than CC Neuberger. In addition to that, Jaws Mustang is 1.09 times more volatile than CC Neuberger Principal. It trades about 0.08 of its total potential returns per unit of risk. CC Neuberger Principal is currently generating about 0.25 per unit of volatility. If you would invest 1,039 in CC Neuberger Principal on August 26, 2024 and sell it today you would earn a total of 49.00 from holding CC Neuberger Principal or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 14.55% |
| Values | Daily Returns |
Jaws Mustang Acquisition vs. CC Neuberger Principal
Performance |
| Timeline |
| Jaws Mustang Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| CC Neuberger Principal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Jaws Mustang and CC Neuberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jaws Mustang and CC Neuberger
The main advantage of trading using opposite Jaws Mustang and CC Neuberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jaws Mustang position performs unexpectedly, CC Neuberger 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 CC Neuberger will offset losses from the drop in CC Neuberger's long position.The idea behind Jaws Mustang Acquisition and CC Neuberger Principal 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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