Correlation Between NYSE Composite and Ahren Acquisition

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

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

Diversification Opportunities for NYSE Composite and Ahren Acquisition

0.69

Correlation Coefficient

NYSE Composite  Ahren Acquisition

Poor diversification

The 3 months correlation between NYSE and Ahren is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Ahren Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ahren Acquisition Corp and NYSE Composite 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 NYSE Composite are associated (or correlated) with Ahren Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ahren Acquisition Corp has no effect on the direction of NYSE Composite i.e., NYSE Composite and Ahren Acquisition go up and down completely randomly.

Pair Corralation between NYSE Composite and Ahren Acquisition

Assuming the 90 days trading horizon NYSE Composite is expected to generate 8.44 times more return on investment than Ahren Acquisition. However, NYSE Composite is 8.44 times more volatile than Ahren Acquisition Corp. It trades about 0.06 of its potential returns per unit of risk. Ahren Acquisition Corp is currently generating about 0.24 per unit of risk. If you would invest  1,524,121  in NYSE Composite on September 19, 2024 and sell it today you would earn a total of  374,575  from holding NYSE Composite or generate 24.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	23.79%
Values	Daily Returns

NYSE Composite  vs.  Ahren Acquisition Corp

Pair Trading with NYSE Composite and Ahren Acquisition

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

The idea behind NYSE Composite and Ahren 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.