Correlation Between Newcourt Acquisition and XPAC Acquisition

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

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

Diversification Opportunities for Newcourt Acquisition and XPAC Acquisition

0.92

Correlation Coefficient

Newcourt Acquisition  XPAC Acquisition

Almost no diversification

The 3 months correlation between Newcourt and XPAC is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Newcourt Acquisition Corp and XPAC Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPAC Acquisition Corp and Newcourt Acquisition 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 Newcourt Acquisition Corp are associated (or correlated) with XPAC Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPAC Acquisition Corp has no effect on the direction of Newcourt Acquisition i.e., Newcourt Acquisition and XPAC Acquisition go up and down completely randomly.

Pair Corralation between Newcourt Acquisition and XPAC Acquisition

If you would invest  1,039  in XPAC Acquisition Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding XPAC Acquisition Corp or generate 0.0% return on investment over 90 days.

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

Newcourt Acquisition Corp  vs.  XPAC Acquisition Corp

Newcourt Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

XPAC Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Newcourt Acquisition and XPAC Acquisition

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

The idea behind Newcourt Acquisition Corp and XPAC 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.