Correlation Between Gores Holdings and Metals Acquisition

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

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

Diversification Opportunities for Gores Holdings and Metals Acquisition

0.0

Correlation Coefficient

Gores Holdings  Metals Acquisition

Pay attention - limited upside

The 3 months correlation between Gores and Metals is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gores Holdings IX and Metals Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Acquisition and Gores Holdings 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 Gores Holdings IX are associated (or correlated) with Metals Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Acquisition has no effect on the direction of Gores Holdings i.e., Gores Holdings and Metals Acquisition go up and down completely randomly.

Pair Corralation between Gores Holdings and Metals Acquisition

Given the investment horizon of 90 days Gores Holdings IX is expected to under-perform the Metals Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Gores Holdings IX is 7.08 times less risky than Metals Acquisition. The stock trades about -0.17 of its potential returns per unit of risk. The Metals Acquisition Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,136  in Metals Acquisition Limited on September 16, 2024 and sell it today you would earn a total of  84.00  from holding Metals Acquisition Limited or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

Gores Holdings IX  vs.  Metals Acquisition Limited

Gores Holdings IX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gores Holdings IX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Gores Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Metals Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Acquisition Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Metals Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gores Holdings and Metals Acquisition

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

The idea behind Gores Holdings IX and Metals Acquisition Limited 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.