Correlation Between Noble Rock and Monterey Capital
Can any of the company-specific risk be diversified away by investing in both Noble Rock and Monterey 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 Noble Rock and Monterey Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble Rock Acquisition and Monterey Capital Acquisition, you can compare the effects of market volatilities on Noble Rock and Monterey 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 Noble Rock with a short position of Monterey Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Rock and Monterey Capital.
Diversification Opportunities for Noble Rock and Monterey Capital
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Noble and Monterey is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Noble Rock Acquisition and Monterey Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monterey Capital Acq and Noble Rock 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 Noble Rock Acquisition are associated (or correlated) with Monterey Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monterey Capital Acq has no effect on the direction of Noble Rock i.e., Noble Rock and Monterey Capital go up and down completely randomly.
Pair Corralation between Noble Rock and Monterey Capital
Assuming the 90 days horizon Noble Rock is expected to generate 2.4 times less return on investment than Monterey Capital. But when comparing it to its historical volatility, Noble Rock Acquisition is 3.36 times less risky than Monterey Capital. It trades about 0.14 of its potential returns per unit of risk. Monterey Capital Acquisition is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Monterey Capital Acquisition on August 30, 2024 and sell it today you would lose (2.49) from holding Monterey Capital Acquisition or give up 71.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 64.56% |
| Values | Daily Returns |
Noble Rock Acquisition vs. Monterey Capital Acquisition
Performance |
| Timeline |
| Noble Rock Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Monterey Capital Acq |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Noble Rock and Monterey Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Rock and Monterey Capital
The main advantage of trading using opposite Noble Rock and Monterey Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Rock position performs unexpectedly, Monterey 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 Monterey Capital will offset losses from the drop in Monterey Capital's long position.The idea behind Noble Rock Acquisition and Monterey Capital 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |