Correlation Between SPAC and Renaissance IPO

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

By analyzing existing cross correlation between SPAC and New and Renaissance IPO ETF, you can compare the effects of market volatilities on SPAC and Renaissance IPO 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 SPAC with a short position of Renaissance IPO. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPAC and Renaissance IPO.

Diversification Opportunities for SPAC and Renaissance IPO

0.26

Correlation Coefficient

SPAC  Renaissance IPO

Modest diversification

The 3 months correlation between SPAC and Renaissance is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SPAC and New and Renaissance IPO ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renaissance IPO ETF and SPAC 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 SPAC and New are associated (or correlated) with Renaissance IPO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renaissance IPO ETF has no effect on the direction of SPAC i.e., SPAC and Renaissance IPO go up and down completely randomly.

Pair Corralation between SPAC and Renaissance IPO

Given the investment horizon of 90 days SPAC and New is expected to under-perform the Renaissance IPO. But the etf apears to be less risky and, when comparing its historical volatility, SPAC and New is 2.11 times less risky than Renaissance IPO. The etf trades about 0.0 of its potential returns per unit of risk. The Renaissance IPO ETF is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,036  in Renaissance IPO ETF on September 4, 2024 and sell it today you would earn a total of  559.00  from holding Renaissance IPO ETF or generate 13.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SPAC and New  vs.  Renaissance IPO ETF

SPAC and New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPAC and New has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, SPAC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Renaissance IPO ETF

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Renaissance IPO ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Renaissance IPO displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPAC and Renaissance IPO

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

The idea behind SPAC and New and Renaissance IPO ETF 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.