Correlation Between Relativity Acquisition and Southwest Gas

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

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

Diversification Opportunities for Relativity Acquisition and Southwest Gas

0.0

Correlation Coefficient

Relativity Acquisition  Southwest Gas

Pay attention - limited upside

The 3 months correlation between Relativity and Southwest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Relativity Acquisition Corp and Southwest Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Gas Holdings and Relativity 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 Relativity Acquisition Corp are associated (or correlated) with Southwest Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Gas Holdings has no effect on the direction of Relativity Acquisition i.e., Relativity Acquisition and Southwest Gas go up and down completely randomly.

Pair Corralation between Relativity Acquisition and Southwest Gas

If you would invest  7,168  in Southwest Gas Holdings on September 13, 2024 and sell it today you would earn a total of  346.00  from holding Southwest Gas Holdings or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Relativity Acquisition Corp  vs.  Southwest Gas Holdings

Relativity Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Relativity Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Relativity Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Southwest Gas Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Southwest Gas Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Southwest Gas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Relativity Acquisition and Southwest Gas

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

The idea behind Relativity Acquisition Corp and Southwest Gas Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.