Correlation Between Jaws Mustang and Pontem Corp

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

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

Diversification Opportunities for Jaws Mustang and Pontem Corp

0.78

Correlation Coefficient

Jaws Mustang  Pontem Corp

Poor diversification

The 3 months correlation between Jaws and Pontem is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Jaws Mustang Acquisition and Pontem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pontem Corp and Jaws Mustang 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 Jaws Mustang Acquisition are associated (or correlated) with Pontem Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pontem Corp has no effect on the direction of Jaws Mustang i.e., Jaws Mustang and Pontem Corp go up and down completely randomly.

Pair Corralation between Jaws Mustang and Pontem Corp

If you would invest  1,123  in Jaws Mustang Acquisition on September 17, 2024 and sell it today you would earn a total of  7.00  from holding Jaws Mustang Acquisition or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.44%
Values	Daily Returns

Jaws Mustang Acquisition  vs.  Pontem Corp

Jaws Mustang Acquisition

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Jaws Mustang Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Jaws Mustang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pontem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pontem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Pontem Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Jaws Mustang and Pontem Corp

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

The idea behind Jaws Mustang Acquisition and Pontem 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.