Correlation Between Kernel Group and ESGEN Acquisition
Can any of the company-specific risk be diversified away by investing in both Kernel Group and ESGEN 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 Kernel Group and ESGEN Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kernel Group Holdings and ESGEN Acquisition Corp, you can compare the effects of market volatilities on Kernel Group and ESGEN 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 Kernel Group with a short position of ESGEN Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kernel Group and ESGEN Acquisition.
Diversification Opportunities for Kernel Group and ESGEN Acquisition
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kernel and ESGEN is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kernel Group Holdings and ESGEN Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGEN Acquisition Corp and Kernel Group 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 Kernel Group Holdings are associated (or correlated) with ESGEN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGEN Acquisition Corp has no effect on the direction of Kernel Group i.e., Kernel Group and ESGEN Acquisition go up and down completely randomly.
Pair Corralation between Kernel Group and ESGEN Acquisition
Assuming the 90 days horizon Kernel Group is expected to generate 1.79 times less return on investment than ESGEN Acquisition. In addition to that, Kernel Group is 2.34 times more volatile than ESGEN Acquisition Corp. It trades about 0.02 of its total potential returns per unit of risk. ESGEN Acquisition Corp is currently generating about 0.06 per unit of volatility. 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 |
Kernel Group Holdings vs. ESGEN Acquisition Corp
Performance |
| Timeline |
| Kernel Group Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ESGEN Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kernel Group and ESGEN Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kernel Group and ESGEN Acquisition
The main advantage of trading using opposite Kernel Group and ESGEN Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kernel Group position performs unexpectedly, ESGEN 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 ESGEN Acquisition will offset losses from the drop in ESGEN Acquisition's long position.The idea behind Kernel Group Holdings and ESGEN Acquisition Corp 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.| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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