Correlation Between CBOE Crude and Inflection Point

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

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

Diversification Opportunities for CBOE Crude and Inflection Point

-0.44

Correlation Coefficient

CBOE Crude  Inflection Point

Very good diversification

The 3 months correlation between CBOE and Inflection is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CBOE Crude Oil and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq and CBOE Crude 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 CBOE Crude Oil are associated (or correlated) with Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of CBOE Crude i.e., CBOE Crude and Inflection Point go up and down completely randomly.

Pair Corralation between CBOE Crude and Inflection Point

Assuming the 90 days trading horizon CBOE Crude is expected to generate 3.56 times less return on investment than Inflection Point. In addition to that, CBOE Crude is 2.17 times more volatile than Inflection Point Acquisition. It trades about 0.02 of its total potential returns per unit of risk. Inflection Point Acquisition is currently generating about 0.12 per unit of volatility. If you would invest  1,075  in Inflection Point Acquisition on September 19, 2024 and sell it today you would earn a total of  260.00  from holding Inflection Point Acquisition or generate 24.19% return on investment over 90 days.

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

CBOE Crude Oil  vs.  Inflection Point Acquisition

Pair Trading with CBOE Crude and Inflection Point

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

The idea behind CBOE Crude Oil and Inflection Point 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.