Correlation Between Mountain I and Mars Acquisition
Can any of the company-specific risk be diversified away by investing in both Mountain I and Mars 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 Mountain I and Mars Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mountain I Acquisition and Mars Acquisition Corp, you can compare the effects of market volatilities on Mountain I and Mars 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 Mountain I with a short position of Mars Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mountain I and Mars Acquisition.
Diversification Opportunities for Mountain I and Mars Acquisition
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mountain and Mars is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Mountain I Acquisition and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp and Mountain I 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 Mountain I Acquisition are associated (or correlated) with Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Mountain I i.e., Mountain I and Mars Acquisition go up and down completely randomly.
Pair Corralation between Mountain I and Mars Acquisition
Given the investment horizon of 90 days Mountain I Acquisition is expected to generate 0.12 times more return on investment than Mars Acquisition. However, Mountain I Acquisition is 8.34 times less risky than Mars Acquisition. It trades about 0.03 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about -0.04 per unit of risk. If you would invest 1,126 in Mountain I Acquisition on September 12, 2024 and sell it today you would earn a total of 13.00 from holding Mountain I Acquisition or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.94% |
| Values | Daily Returns |
Mountain I Acquisition vs. Mars Acquisition Corp
Performance |
| Timeline |
| Mountain I Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Mars Acquisition Corp |
Mountain I and Mars Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mountain I and Mars Acquisition
The main advantage of trading using opposite Mountain I and Mars Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mountain I position performs unexpectedly, Mars 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 Mars Acquisition will offset losses from the drop in Mars Acquisition's long position.The idea behind Mountain I Acquisition and Mars 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.| Mars Acquisition vs. HUMANA INC | Mars Acquisition vs. Barloworld Ltd ADR | Mars Acquisition vs. Morningstar Unconstrained Allocation | Mars Acquisition vs. Thrivent High Yield |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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