Correlation Between Andretti Acquisition and Broadstone Net

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

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

Diversification Opportunities for Andretti Acquisition and Broadstone Net

0.65

Correlation Coefficient

Andretti Acquisition  Broadstone Net

Poor diversification

The 3 months correlation between Andretti and Broadstone is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Andretti Acquisition Corp and Broadstone Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net Lease and Andretti 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 Andretti Acquisition Corp are associated (or correlated) with Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net Lease has no effect on the direction of Andretti Acquisition i.e., Andretti Acquisition and Broadstone Net go up and down completely randomly.

Pair Corralation between Andretti Acquisition and Broadstone Net

Assuming the 90 days horizon Andretti Acquisition Corp is expected to generate 25.56 times more return on investment than Broadstone Net. However, Andretti Acquisition is 25.56 times more volatile than Broadstone Net Lease. It trades about 0.17 of its potential returns per unit of risk. Broadstone Net Lease is currently generating about -0.15 per unit of risk. If you would invest  8.53  in Andretti Acquisition Corp on September 19, 2024 and sell it today you would earn a total of  7.47  from holding Andretti Acquisition Corp or generate 87.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.79%
Values	Daily Returns

Andretti Acquisition Corp  vs.  Broadstone Net Lease

Andretti Acquisition Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andretti Acquisition Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Andretti Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Andretti Acquisition and Broadstone Net

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

The idea behind Andretti Acquisition Corp and Broadstone Net Lease 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.