Correlation Between ExcelFin Acquisition and VMG Consumer

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

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

Diversification Opportunities for ExcelFin Acquisition and VMG Consumer

0.27

Correlation Coefficient

ExcelFin Acquisition  VMG Consumer

Modest diversification

The 3 months correlation between ExcelFin and VMG is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ExcelFin Acquisition Corp and VMG Consumer Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VMG Consumer Acquisition and ExcelFin 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 ExcelFin Acquisition Corp are associated (or correlated) with VMG Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VMG Consumer Acquisition has no effect on the direction of ExcelFin Acquisition i.e., ExcelFin Acquisition and VMG Consumer go up and down completely randomly.

Pair Corralation between ExcelFin Acquisition and VMG Consumer

If you would invest  1,039  in VMG Consumer Acquisition on September 17, 2024 and sell it today you would earn a total of  0.00  from holding VMG Consumer Acquisition or generate 0.0% return on investment over 90 days.

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

ExcelFin Acquisition Corp  vs.  VMG Consumer Acquisition

ExcelFin Acquisition Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days ExcelFin Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, ExcelFin Acquisition unveiled solid returns over the last few months and may actually be approaching a breakup point.

VMG Consumer Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ExcelFin Acquisition and VMG Consumer

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

The idea behind ExcelFin Acquisition Corp and VMG Consumer 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.