Correlation Between L Catterton and Arrowroot Acquisition

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

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

Diversification Opportunities for L Catterton and Arrowroot Acquisition

-0.18

Correlation Coefficient

L Catterton  Arrowroot Acquisition

Good diversification

The 3 months correlation between LCAAW and Arrowroot is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding L Catterton Asia and Arrowroot Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowroot Acquisition and L Catterton 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 L Catterton Asia are associated (or correlated) with Arrowroot Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowroot Acquisition has no effect on the direction of L Catterton i.e., L Catterton and Arrowroot Acquisition go up and down completely randomly.

Pair Corralation between L Catterton and Arrowroot Acquisition

If you would invest  20.00  in Arrowroot Acquisition Corp on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Arrowroot Acquisition Corp or generate 0.0% return on investment over 90 days.

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

L Catterton Asia  vs.  Arrowroot Acquisition Corp

L Catterton Asia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Arrowroot Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrowroot Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arrowroot 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 L Catterton and Arrowroot Acquisition

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

The idea behind L Catterton Asia and Arrowroot 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.