Correlation Between L Catterton and Marblegate Acquisition
Can any of the company-specific risk be diversified away by investing in both L Catterton and Marblegate 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 L Catterton and Marblegate Acquisition 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 Marblegate Acquisition Corp, you can compare the effects of market volatilities on L Catterton and Marblegate 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 L Catterton with a short position of Marblegate Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Catterton and Marblegate Acquisition.
Diversification Opportunities for L Catterton and Marblegate Acquisition
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between LCAAW and Marblegate is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and Marblegate Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marblegate 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 Marblegate Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marblegate Acquisition has no effect on the direction of L Catterton i.e., L Catterton and Marblegate Acquisition go up and down completely randomly.
Pair Corralation between L Catterton and Marblegate Acquisition
Assuming the 90 days horizon L Catterton Asia is expected to generate 4.3 times more return on investment than Marblegate Acquisition. However, L Catterton is 4.3 times more volatile than Marblegate Acquisition Corp. It trades about 0.13 of its potential returns per unit of risk. Marblegate Acquisition Corp is currently generating about 0.08 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 Together |
| Strength | Insignificant |
| Accuracy | 25.35% |
| Values | Daily Returns |
L Catterton Asia vs. Marblegate Acquisition Corp
Performance |
| Timeline |
| L Catterton Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Marblegate Acquisition |
L Catterton and Marblegate Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Catterton and Marblegate Acquisition
The main advantage of trading using opposite L Catterton and Marblegate Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Catterton position performs unexpectedly, Marblegate 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 Marblegate Acquisition will offset losses from the drop in Marblegate Acquisition's long position.The idea behind L Catterton Asia and Marblegate 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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