Correlation Between The Merger and Strategic Advisers
Can any of the company-specific risk be diversified away by investing in both The Merger and Strategic Advisers 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 The Merger and Strategic Advisers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Merger Fund and Strategic Advisers Income, you can compare the effects of market volatilities on The Merger and Strategic Advisers 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 The Merger with a short position of Strategic Advisers. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Merger and Strategic Advisers.
Diversification Opportunities for The Merger and Strategic Advisers
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between The and Strategic is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Merger Fund and Strategic Advisers Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Advisers Income and The Merger 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 The Merger Fund are associated (or correlated) with Strategic Advisers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Advisers Income has no effect on the direction of The Merger i.e., The Merger and Strategic Advisers go up and down completely randomly.
Pair Corralation between The Merger and Strategic Advisers
Assuming the 90 days horizon The Merger is expected to generate 6.7 times less return on investment than Strategic Advisers. In addition to that, The Merger is 1.59 times more volatile than Strategic Advisers Income. It trades about 0.03 of its total potential returns per unit of risk. Strategic Advisers Income is currently generating about 0.29 per unit of volatility. If you would invest 878.00 in Strategic Advisers Income on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Strategic Advisers Income or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Merger Fund vs. Strategic Advisers Income
Performance |
| Timeline |
| Merger Fund |
| Strategic Advisers Income |
The Merger and Strategic Advisers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Merger and Strategic Advisers
The main advantage of trading using opposite The Merger and Strategic Advisers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Merger position performs unexpectedly, Strategic Advisers 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 Strategic Advisers will offset losses from the drop in Strategic Advisers' long position.| The Merger vs. Calamos Market Neutral | The Merger vs. Gateway Fund Class | The Merger vs. The Arbitrage Fund | The Merger vs. Neuberger Berman Long |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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