Correlation Between Mountain Crest and Golden Arrow

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

By analyzing existing cross correlation between Mountain Crest Acquisition and Golden Arrow Merger, you can compare the effects of market volatilities on Mountain Crest and Golden Arrow 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 Mountain Crest with a short position of Golden Arrow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mountain Crest and Golden Arrow.

Diversification Opportunities for Mountain Crest and Golden Arrow

-0.35

Correlation Coefficient

Mountain Crest  Golden Arrow

Very good diversification

The 3 months correlation between Mountain and Golden is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mountain Crest Acquisition and Golden Arrow Merger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Arrow Merger and Mountain Crest 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 Mountain Crest Acquisition are associated (or correlated) with Golden Arrow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Arrow Merger has no effect on the direction of Mountain Crest i.e., Mountain Crest and Golden Arrow go up and down completely randomly.

Pair Corralation between Mountain Crest and Golden Arrow

Given the investment horizon of 90 days Mountain Crest Acquisition is expected to generate 0.06 times more return on investment than Golden Arrow. However, Mountain Crest Acquisition is 15.79 times less risky than Golden Arrow. It trades about 0.11 of its potential returns per unit of risk. Golden Arrow Merger is currently generating about -0.06 per unit of risk. If you would invest  1,007  in Mountain Crest Acquisition on September 14, 2024 and sell it today you would earn a total of  51.00  from holding Mountain Crest Acquisition or generate 5.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	34.62%
Values	Daily Returns

Mountain Crest Acquisition  vs.  Golden Arrow Merger

Mountain Crest Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mountain Crest Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mountain Crest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Golden Arrow Merger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Arrow Merger has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Golden Arrow is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mountain Crest and Golden Arrow

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

The idea behind Mountain Crest Acquisition and Golden Arrow Merger 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.