Correlation Between Jaws Mustang and Screaming Eagle

Can any of the company-specific risk be diversified away by investing in both Jaws Mustang and Screaming Eagle 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 Screaming Eagle 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 Screaming Eagle Acquisition, you can compare the effects of market volatilities on Jaws Mustang and Screaming Eagle 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 Screaming Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaws Mustang and Screaming Eagle.

Diversification Opportunities for Jaws Mustang and Screaming Eagle

0.87

Correlation Coefficient

Jaws Mustang  Screaming Eagle

Very poor diversification

The 3 months correlation between Jaws and Screaming is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Jaws Mustang Acquisition and Screaming Eagle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Screaming Eagle Acqu 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 Screaming Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Screaming Eagle Acqu has no effect on the direction of Jaws Mustang i.e., Jaws Mustang and Screaming Eagle go up and down completely randomly.

Pair Corralation between Jaws Mustang and Screaming Eagle

If you would invest  1,036  in Screaming Eagle Acquisition on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Screaming Eagle Acquisition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Jaws Mustang Acquisition  vs.  Screaming Eagle Acquisition

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.

Screaming Eagle Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jaws Mustang and Screaming Eagle

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

The idea behind Jaws Mustang Acquisition and Screaming Eagle 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.