Correlation Between CO2 Energy and FTAC Emerald

Can any of the company-specific risk be diversified away by investing in both CO2 Energy and FTAC Emerald 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 CO2 Energy and FTAC Emerald into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CO2 Energy Transition and FTAC Emerald Acquisition, you can compare the effects of market volatilities on CO2 Energy and FTAC Emerald 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 CO2 Energy with a short position of FTAC Emerald. Check out your portfolio center. Please also check ongoing floating volatility patterns of CO2 Energy and FTAC Emerald.

Diversification Opportunities for CO2 Energy and FTAC Emerald

-0.79

Correlation Coefficient

CO2 Energy  FTAC Emerald

Pay attention - limited upside

The 3 months correlation between CO2 and FTAC is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CO2 Energy Transition and FTAC Emerald Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAC Emerald Acquisition and CO2 Energy 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 CO2 Energy Transition are associated (or correlated) with FTAC Emerald. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAC Emerald Acquisition has no effect on the direction of CO2 Energy i.e., CO2 Energy and FTAC Emerald go up and down completely randomly.

Pair Corralation between CO2 Energy and FTAC Emerald

Assuming the 90 days horizon CO2 Energy is expected to generate 2.34 times less return on investment than FTAC Emerald. But when comparing it to its historical volatility, CO2 Energy Transition is 7.11 times less risky than FTAC Emerald. It trades about 0.33 of its potential returns per unit of risk. FTAC Emerald Acquisition is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,083  in FTAC Emerald Acquisition on September 5, 2024 and sell it today you would earn a total of  36.00  from holding FTAC Emerald Acquisition or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	14.06%
Values	Daily Returns

CO2 Energy Transition  vs.  FTAC Emerald Acquisition

CO2 Energy Transition

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in CO2 Energy Transition are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, CO2 Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FTAC Emerald Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FTAC Emerald Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, FTAC Emerald is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CO2 Energy and FTAC Emerald

The main advantage of trading using opposite CO2 Energy and FTAC Emerald positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CO2 Energy position performs unexpectedly, FTAC Emerald 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 FTAC Emerald will offset losses from the drop in FTAC Emerald's long position.

The idea behind CO2 Energy Transition and FTAC Emerald 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.