Correlation Between Prospector Capital and Tastemaker Acquisition
Can any of the company-specific risk be diversified away by investing in both Prospector Capital and Tastemaker 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 Prospector Capital and Tastemaker Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospector Capital Corp and Tastemaker Acquisition Corp, you can compare the effects of market volatilities on Prospector Capital and Tastemaker 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 Prospector Capital with a short position of Tastemaker Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospector Capital and Tastemaker Acquisition.
Diversification Opportunities for Prospector Capital and Tastemaker Acquisition
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prospector and Tastemaker is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prospector Capital Corp and Tastemaker Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tastemaker Acquisition and Prospector Capital 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 Prospector Capital Corp are associated (or correlated) with Tastemaker Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tastemaker Acquisition has no effect on the direction of Prospector Capital i.e., Prospector Capital and Tastemaker Acquisition go up and down completely randomly.
Pair Corralation between Prospector Capital and Tastemaker Acquisition
If you would invest (100.00) in Tastemaker Acquisition Corp on November 27, 2024 and sell it today you would earn a total of 100.00 from holding Tastemaker Acquisition Corp or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospector Capital Corp vs. Tastemaker Acquisition Corp
Performance |
| Timeline |
| Prospector Capital Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Tastemaker Acquisition |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Prospector Capital and Tastemaker Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospector Capital and Tastemaker Acquisition
The main advantage of trading using opposite Prospector Capital and Tastemaker Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospector Capital position performs unexpectedly, Tastemaker 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 Tastemaker Acquisition will offset losses from the drop in Tastemaker Acquisition's long position.The idea behind Prospector Capital Corp and Tastemaker 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.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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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