Correlation Between Roth CH and FG Merger
Can any of the company-specific risk be diversified away by investing in both Roth CH and FG Merger 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 Roth CH and FG Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roth CH Acquisition and FG Merger Corp, you can compare the effects of market volatilities on Roth CH and FG Merger 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 Roth CH with a short position of FG Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roth CH and FG Merger.
Diversification Opportunities for Roth CH and FG Merger
Good diversification
The 3 months correlation between Roth and FGMCW is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Roth CH Acquisition and FG Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Merger Corp and Roth CH 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 Roth CH Acquisition are associated (or correlated) with FG Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Merger Corp has no effect on the direction of Roth CH i.e., Roth CH and FG Merger go up and down completely randomly.
Pair Corralation between Roth CH and FG Merger
Assuming the 90 days horizon Roth CH is expected to generate 7.31 times less return on investment than FG Merger. But when comparing it to its historical volatility, Roth CH Acquisition is 7.04 times less risky than FG Merger. It trades about 0.19 of its potential returns per unit of risk. FG Merger Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 5.00 in FG Merger Corp on September 3, 2024 and sell it today you would earn a total of 5.00 from holding FG Merger Corp or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.42% |
| Values | Daily Returns |
Roth CH Acquisition vs. FG Merger Corp
Performance |
| Timeline |
| Roth CH Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FG Merger Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Roth CH and FG Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roth CH and FG Merger
The main advantage of trading using opposite Roth CH and FG Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roth CH position performs unexpectedly, FG Merger 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 FG Merger will offset losses from the drop in FG Merger's long position.The idea behind Roth CH Acquisition and FG Merger 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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