Correlation Between L Catterton and Anzu Special
Can any of the company-specific risk be diversified away by investing in both L Catterton and Anzu Special 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 L Catterton and Anzu Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L Catterton Asia and Anzu Special Acquisition, you can compare the effects of market volatilities on L Catterton and Anzu Special 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 L Catterton with a short position of Anzu Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Catterton and Anzu Special.
Diversification Opportunities for L Catterton and Anzu Special
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LCAAW and Anzu is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and Anzu Special Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anzu Special Acquisition and L Catterton 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 L Catterton Asia are associated (or correlated) with Anzu Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anzu Special Acquisition has no effect on the direction of L Catterton i.e., L Catterton and Anzu Special go up and down completely randomly.
Pair Corralation between L Catterton and Anzu Special
Assuming the 90 days horizon L Catterton Asia is expected to generate 4.59 times more return on investment than Anzu Special. However, L Catterton is 4.59 times more volatile than Anzu Special Acquisition. It trades about 0.13 of its potential returns per unit of risk. Anzu Special Acquisition is currently generating about 0.09 per unit of risk. If you would invest 0.95 in L Catterton Asia on August 26, 2024 and sell it today you would earn a total of 48.05 from holding L Catterton Asia or generate 5057.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.65% |
| Values | Daily Returns |
L Catterton Asia vs. Anzu Special Acquisition
Performance |
| Timeline |
| L Catterton Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Anzu Special Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
L Catterton and Anzu Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Catterton and Anzu Special
The main advantage of trading using opposite L Catterton and Anzu Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Catterton position performs unexpectedly, Anzu Special 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 Anzu Special will offset losses from the drop in Anzu Special's long position.The idea behind L Catterton Asia and Anzu Special Acquisition 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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