Correlation Between Marblegate Acquisition and Compass Digital

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

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

Diversification Opportunities for Marblegate Acquisition and Compass Digital

0.15

Correlation Coefficient

Marblegate Acquisition  Compass Digital

Average diversification

The 3 months correlation between Marblegate and Compass is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Marblegate Acquisition Corp and Compass Digital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Digital Acqu and Marblegate 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 Marblegate Acquisition Corp are associated (or correlated) with Compass Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Digital Acqu has no effect on the direction of Marblegate Acquisition i.e., Marblegate Acquisition and Compass Digital go up and down completely randomly.

Pair Corralation between Marblegate Acquisition and Compass Digital

Assuming the 90 days horizon Marblegate Acquisition Corp is expected to generate 23.11 times more return on investment than Compass Digital. However, Marblegate Acquisition is 23.11 times more volatile than Compass Digital Acquisition. It trades about 0.12 of its potential returns per unit of risk. Compass Digital Acquisition is currently generating about 0.2 per unit of risk. If you would invest  1,003  in Marblegate Acquisition Corp on September 12, 2024 and sell it today you would earn a total of  122.20  from holding Marblegate Acquisition Corp or generate 12.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.56%
Values	Daily Returns

Marblegate Acquisition Corp  vs.  Compass Digital Acquisition

Marblegate Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marblegate Acquisition Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Marblegate Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Compass Digital Acqu

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Compass Digital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Compass Digital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Marblegate Acquisition and Compass Digital

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

The idea behind Marblegate Acquisition Corp and Compass Digital Acquisition 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.