Correlation Between SportsMap Tech and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both SportsMap Tech and Plum 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 SportsMap Tech and Plum Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SportsMap Tech Acquisition and Plum Acquisition Corp, you can compare the effects of market volatilities on SportsMap Tech and Plum 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 SportsMap Tech with a short position of Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of SportsMap Tech and Plum Acquisition.
Diversification Opportunities for SportsMap Tech and Plum Acquisition
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SportsMap and Plum is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SportsMap Tech Acquisition and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and SportsMap Tech 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 SportsMap Tech Acquisition are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of SportsMap Tech i.e., SportsMap Tech and Plum Acquisition go up and down completely randomly.
Pair Corralation between SportsMap Tech and Plum Acquisition
Assuming the 90 days horizon SportsMap Tech is expected to generate 8.27 times less return on investment than Plum Acquisition. But when comparing it to its historical volatility, SportsMap Tech Acquisition is 5.19 times less risky than Plum Acquisition. It trades about 0.09 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4.37 in Plum Acquisition Corp on August 30, 2024 and sell it today you would earn a total of 20.63 from holding Plum Acquisition Corp or generate 472.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 18.04% |
| Values | Daily Returns |
SportsMap Tech Acquisition vs. Plum Acquisition Corp
Performance |
| Timeline |
| SportsMap Tech Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Plum Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
SportsMap Tech and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SportsMap Tech and Plum Acquisition
The main advantage of trading using opposite SportsMap Tech and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SportsMap Tech position performs unexpectedly, Plum 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.The idea behind SportsMap Tech Acquisition and Plum 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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