Correlation Between RF Acquisition and Maiden Holdings
Can any of the company-specific risk be diversified away by investing in both RF Acquisition and Maiden Holdings 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 RF Acquisition and Maiden Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RF Acquisition Corp and Maiden Holdings, you can compare the effects of market volatilities on RF Acquisition and Maiden Holdings 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 RF Acquisition with a short position of Maiden Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Acquisition and Maiden Holdings.
Diversification Opportunities for RF Acquisition and Maiden Holdings
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RFACR and Maiden is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding RF Acquisition Corp and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and RF Acquisition 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 RF Acquisition Corp are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of RF Acquisition i.e., RF Acquisition and Maiden Holdings go up and down completely randomly.
Pair Corralation between RF Acquisition and Maiden Holdings
Assuming the 90 days horizon RF Acquisition Corp is expected to generate 5.97 times more return on investment than Maiden Holdings. However, RF Acquisition is 5.97 times more volatile than Maiden Holdings. It trades about 0.06 of its potential returns per unit of risk. Maiden Holdings is currently generating about 0.11 per unit of risk. If you would invest 25.00 in RF Acquisition Corp on November 27, 2024 and sell it today you would earn a total of 0.00 from holding RF Acquisition Corp or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 71.43% |
Values | Daily Returns |
RF Acquisition Corp vs. Maiden Holdings
Performance |
Timeline |
RF Acquisition Corp |
Risk-Adjusted Performance
Good
Weak | Strong |
Maiden Holdings |
RF Acquisition and Maiden Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RF Acquisition and Maiden Holdings
The main advantage of trading using opposite RF Acquisition and Maiden Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RF Acquisition position performs unexpectedly, Maiden Holdings 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 Maiden Holdings will offset losses from the drop in Maiden Holdings' long position.RF Acquisition vs. Eltek | ||
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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