Correlation Between AltEnergy Acquisition and Berenson Acquisition

Can any of the company-specific risk be diversified away by investing in both AltEnergy Acquisition and Berenson 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 AltEnergy Acquisition and Berenson Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AltEnergy Acquisition Corp and Berenson Acquisition Corp, you can compare the effects of market volatilities on AltEnergy Acquisition and Berenson 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 AltEnergy Acquisition with a short position of Berenson Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of AltEnergy Acquisition and Berenson Acquisition.

Diversification Opportunities for AltEnergy Acquisition and Berenson Acquisition

0.51

Correlation Coefficient

AltEnergy Acquisition  Berenson Acquisition

Very weak diversification

The 3 months correlation between AltEnergy and Berenson is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AltEnergy Acquisition Corp and Berenson Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berenson Acquisition Corp and AltEnergy 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 AltEnergy Acquisition Corp are associated (or correlated) with Berenson Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berenson Acquisition Corp has no effect on the direction of AltEnergy Acquisition i.e., AltEnergy Acquisition and Berenson Acquisition go up and down completely randomly.

Pair Corralation between AltEnergy Acquisition and Berenson Acquisition

Assuming the 90 days horizon AltEnergy Acquisition Corp is expected to under-perform the Berenson Acquisition. In addition to that, AltEnergy Acquisition is 149.91 times more volatile than Berenson Acquisition Corp. It trades about -0.09 of its total potential returns per unit of risk. Berenson Acquisition Corp is currently generating about 0.37 per unit of volatility. If you would invest  1,055  in Berenson Acquisition Corp on September 18, 2024 and sell it today you would earn a total of  9.00  from holding Berenson Acquisition Corp or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	62.5%
Values	Daily Returns

AltEnergy Acquisition Corp  vs.  Berenson Acquisition Corp

AltEnergy Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AltEnergy Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Berenson Acquisition Corp

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Berenson Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Berenson Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AltEnergy Acquisition and Berenson Acquisition

The main advantage of trading using opposite AltEnergy Acquisition and Berenson Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AltEnergy Acquisition position performs unexpectedly, Berenson 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 Berenson Acquisition will offset losses from the drop in Berenson Acquisition's long position.

The idea behind AltEnergy Acquisition Corp and Berenson 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.