Correlation Between Stratim Cloud and CF Acquisition
Can any of the company-specific risk be diversified away by investing in both Stratim Cloud and CF 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 Stratim Cloud and CF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stratim Cloud Acquisition and CF Acquisition Corp, you can compare the effects of market volatilities on Stratim Cloud and CF 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 Stratim Cloud with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratim Cloud and CF Acquisition.
Diversification Opportunities for Stratim Cloud and CF Acquisition
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stratim and CFIVW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stratim Cloud Acquisition and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and Stratim Cloud 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 Stratim Cloud Acquisition are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Stratim Cloud i.e., Stratim Cloud and CF Acquisition go up and down completely randomly.
Pair Corralation between Stratim Cloud and CF Acquisition
Assuming the 90 days horizon Stratim Cloud is expected to generate 3.31 times less return on investment than CF Acquisition. But when comparing it to its historical volatility, Stratim Cloud Acquisition is 2.51 times less risky than CF Acquisition. It trades about 0.07 of its potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 10.00 in CF Acquisition Corp on November 5, 2024 and sell it today you would lose (2.00) from holding CF Acquisition Corp or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 69.09% |
| Values | Daily Returns |
Stratim Cloud Acquisition vs. CF Acquisition Corp
Performance |
| Timeline |
| Stratim Cloud Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CF Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stratim Cloud and CF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stratim Cloud and CF Acquisition
The main advantage of trading using opposite Stratim Cloud and CF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stratim Cloud position performs unexpectedly, CF 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 CF Acquisition will offset losses from the drop in CF Acquisition's long position.The idea behind Stratim Cloud Acquisition and CF 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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