Correlation Between Kingswood Acquisition and Cascadia Acquisition
Can any of the company-specific risk be diversified away by investing in both Kingswood Acquisition and Cascadia 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 Kingswood Acquisition and Cascadia Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingswood Acquisition Corp and Cascadia Acquisition Corp, you can compare the effects of market volatilities on Kingswood Acquisition and Cascadia 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 Kingswood Acquisition with a short position of Cascadia Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingswood Acquisition and Cascadia Acquisition.
Diversification Opportunities for Kingswood Acquisition and Cascadia Acquisition
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kingswood and Cascadia is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kingswood Acquisition Corp and Cascadia Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascadia Acquisition Corp and Kingswood 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 Kingswood Acquisition Corp are associated (or correlated) with Cascadia Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascadia Acquisition Corp has no effect on the direction of Kingswood Acquisition i.e., Kingswood Acquisition and Cascadia Acquisition go up and down completely randomly.
Pair Corralation between Kingswood Acquisition and Cascadia Acquisition
Assuming the 90 days horizon Kingswood Acquisition Corp is expected to generate 8.18 times more return on investment than Cascadia Acquisition. However, Kingswood Acquisition is 8.18 times more volatile than Cascadia Acquisition Corp. It trades about 0.24 of its potential returns per unit of risk. Cascadia Acquisition Corp is currently generating about 0.19 per unit of risk. If you would invest 1.30 in Kingswood Acquisition Corp on September 1, 2024 and sell it today you would lose (0.48) from holding Kingswood Acquisition Corp or give up 36.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 37.04% |
| Values | Daily Returns |
Kingswood Acquisition Corp vs. Cascadia Acquisition Corp
Performance |
| Timeline |
| Kingswood Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Cascadia Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kingswood Acquisition and Cascadia Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingswood Acquisition and Cascadia Acquisition
The main advantage of trading using opposite Kingswood Acquisition and Cascadia Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingswood Acquisition position performs unexpectedly, Cascadia 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 Cascadia Acquisition will offset losses from the drop in Cascadia Acquisition's long position.The idea behind Kingswood Acquisition Corp and Cascadia 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.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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