Correlation Between Blue Whale and Armada Acquisition

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

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

Diversification Opportunities for Blue Whale and Armada Acquisition

0.16

Correlation Coefficient

Blue Whale  Armada Acquisition

Average diversification

The 3 months correlation between Blue and Armada is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Blue Whale Acquisition and Armada Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Acquisition Corp and Blue Whale 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 Blue Whale Acquisition are associated (or correlated) with Armada Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Acquisition Corp has no effect on the direction of Blue Whale i.e., Blue Whale and Armada Acquisition go up and down completely randomly.

Pair Corralation between Blue Whale and Armada Acquisition

Assuming the 90 days horizon Blue Whale is expected to generate 12.78 times less return on investment than Armada Acquisition. But when comparing it to its historical volatility, Blue Whale Acquisition is 4.63 times less risky than Armada Acquisition. It trades about 0.04 of its potential returns per unit of risk. Armada Acquisition Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Armada Acquisition Corp on September 16, 2024 and sell it today you would lose (10.00) from holding Armada Acquisition Corp or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	27.85%
Values	Daily Returns

Blue Whale Acquisition  vs.  Armada Acquisition Corp

Blue Whale Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Whale Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Blue Whale is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Armada Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Armada Acquisition is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Blue Whale and Armada Acquisition

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

The idea behind Blue Whale Acquisition and Armada 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.