Correlation Between L Catterton and FTAC Zeus
Can any of the company-specific risk be diversified away by investing in both L Catterton and FTAC Zeus 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 FTAC Zeus 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 FTAC Zeus Acquisition, you can compare the effects of market volatilities on L Catterton and FTAC Zeus 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 FTAC Zeus. Check out your portfolio center. Please also check ongoing floating volatility patterns of L Catterton and FTAC Zeus.
Diversification Opportunities for L Catterton and FTAC Zeus
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LCAAW and FTAC is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and FTAC Zeus Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAC Zeus 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 FTAC Zeus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAC Zeus Acquisition has no effect on the direction of L Catterton i.e., L Catterton and FTAC Zeus go up and down completely randomly.
Pair Corralation between L Catterton and FTAC Zeus
Assuming the 90 days horizon L Catterton Asia is expected to generate 3.24 times more return on investment than FTAC Zeus. However, L Catterton is 3.24 times more volatile than FTAC Zeus Acquisition. It trades about 0.13 of its potential returns per unit of risk. FTAC Zeus Acquisition is currently generating about 0.1 per unit of risk. If you would invest 0.95 in L Catterton Asia on August 30, 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 | Very Weak |
| Accuracy | 72.22% |
| Values | Daily Returns |
L Catterton Asia vs. FTAC Zeus Acquisition
Performance |
| Timeline |
| L Catterton Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FTAC Zeus Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
L Catterton and FTAC Zeus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L Catterton and FTAC Zeus
The main advantage of trading using opposite L Catterton and FTAC Zeus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L Catterton position performs unexpectedly, FTAC Zeus 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 FTAC Zeus will offset losses from the drop in FTAC Zeus' long position.The idea behind L Catterton Asia and FTAC Zeus 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |