Correlation Between IQ Merger and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both IQ Merger and Sparta Capital 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 IQ Merger and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ Merger Arbitrage and Sparta Capital, you can compare the effects of market volatilities on IQ Merger and Sparta Capital 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 IQ Merger with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Merger and Sparta Capital.
Diversification Opportunities for IQ Merger and Sparta Capital
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MNA and Sparta is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding IQ Merger Arbitrage and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and IQ 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 IQ Merger Arbitrage are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of IQ Merger i.e., IQ Merger and Sparta Capital go up and down completely randomly.
Pair Corralation between IQ Merger and Sparta Capital
Considering the 90-day investment horizon IQ Merger Arbitrage is expected to generate 0.03 times more return on investment than Sparta Capital. However, IQ Merger Arbitrage is 28.67 times less risky than Sparta Capital. It trades about -0.04 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.21 per unit of risk. If you would invest 3,283 in IQ Merger Arbitrage on August 29, 2024 and sell it today you would lose (5.00) from holding IQ Merger Arbitrage or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
IQ Merger Arbitrage vs. Sparta Capital
Performance |
| Timeline |
| IQ Merger Arbitrage |
| Sparta Capital |
IQ Merger and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ Merger and Sparta Capital
The main advantage of trading using opposite IQ Merger and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Merger position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| IQ Merger vs. IQ Hedge Multi Strategy | IQ Merger vs. ProShares Merger ETF | IQ Merger vs. AGFiQ Market Neutral |
| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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