Correlation Between Battery Future and Sizzle Acquisition
Can any of the company-specific risk be diversified away by investing in both Battery Future and Sizzle 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 Battery Future and Sizzle Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Battery Future Acquisition and Sizzle Acquisition Corp, you can compare the effects of market volatilities on Battery Future and Sizzle 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 Battery Future with a short position of Sizzle Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battery Future and Sizzle Acquisition.
Diversification Opportunities for Battery Future and Sizzle Acquisition
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Battery and Sizzle is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Battery Future Acquisition and Sizzle Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sizzle Acquisition Corp and Battery Future 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 Battery Future Acquisition are associated (or correlated) with Sizzle Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sizzle Acquisition Corp has no effect on the direction of Battery Future i.e., Battery Future and Sizzle Acquisition go up and down completely randomly.
Pair Corralation between Battery Future and Sizzle Acquisition
If you would invest 1,103 in Battery Future Acquisition on September 18, 2024 and sell it today you would earn a total of 25.00 from holding Battery Future Acquisition or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 1.59% |
| Values | Daily Returns |
Battery Future Acquisition vs. Sizzle Acquisition Corp
Performance |
| Timeline |
| Battery Future Acqui |
| Sizzle Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Battery Future and Sizzle Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Battery Future and Sizzle Acquisition
The main advantage of trading using opposite Battery Future and Sizzle Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Battery Future position performs unexpectedly, Sizzle 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 Sizzle Acquisition will offset losses from the drop in Sizzle Acquisition's long position.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Battery Future as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Battery Future's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Battery Future's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Battery Future Acquisition.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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