Correlation Between Alphabet and Cascadia Acquisition

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

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

Diversification Opportunities for Alphabet and Cascadia Acquisition

0.01

Correlation Coefficient

Alphabet  Cascadia Acquisition

Significant diversification

The 3 months correlation between Alphabet and Cascadia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Cascadia Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascadia Acquisition Corp and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Cascadia Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascadia Acquisition Corp has no effect on the direction of Alphabet i.e., Alphabet and Cascadia Acquisition go up and down completely randomly.

Pair Corralation between Alphabet and Cascadia Acquisition

If you would invest  13,741  in Alphabet Inc Class C on September 17, 2024 and sell it today you would earn a total of  5,397  from holding Alphabet Inc Class C or generate 39.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.34%
Values	Daily Returns

Alphabet Inc Class C  vs.  Cascadia Acquisition Corp

Alphabet Class C

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Cascadia Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alphabet and Cascadia Acquisition

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

The idea behind Alphabet Inc Class C and Cascadia 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.