Correlation Between BurTech Acquisition and Cannae Holdings

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

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

Diversification Opportunities for BurTech Acquisition and Cannae Holdings

-0.66

Correlation Coefficient

BurTech Acquisition  Cannae Holdings

Excellent diversification

The 3 months correlation between BurTech and Cannae is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BurTech Acquisition Corp and Cannae Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannae Holdings and BurTech 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 BurTech Acquisition Corp are associated (or correlated) with Cannae Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannae Holdings has no effect on the direction of BurTech Acquisition i.e., BurTech Acquisition and Cannae Holdings go up and down completely randomly.

Pair Corralation between BurTech Acquisition and Cannae Holdings

Assuming the 90 days horizon BurTech Acquisition Corp is expected to under-perform the Cannae Holdings. But the stock apears to be less risky and, when comparing its historical volatility, BurTech Acquisition Corp is 1.56 times less risky than Cannae Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The Cannae Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,920  in Cannae Holdings on September 1, 2024 and sell it today you would earn a total of  250.00  from holding Cannae Holdings or generate 13.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BurTech Acquisition Corp  vs.  Cannae Holdings

BurTech Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BurTech Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cannae Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Cannae Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BurTech Acquisition and Cannae Holdings

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

The idea behind BurTech Acquisition Corp and Cannae Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.