Correlation Between XPAC Acquisition and Newcourt Acquisition

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

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

Diversification Opportunities for XPAC Acquisition and Newcourt Acquisition

0.92

Correlation Coefficient

XPAC Acquisition  Newcourt Acquisition

Almost no diversification

The 3 months correlation between XPAC and Newcourt is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding XPAC Acquisition Corp and Newcourt Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcourt Acquisition Corp and XPAC 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 XPAC Acquisition Corp are associated (or correlated) with Newcourt Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcourt Acquisition Corp has no effect on the direction of XPAC Acquisition i.e., XPAC Acquisition and Newcourt Acquisition go up and down completely randomly.

Pair Corralation between XPAC Acquisition and Newcourt Acquisition

If you would invest  1,100  in Newcourt Acquisition Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Newcourt Acquisition Corp or generate 0.0% return on investment over 90 days.

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

XPAC Acquisition Corp  vs.  Newcourt Acquisition Corp

XPAC Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Newcourt Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcourt Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Newcourt Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with XPAC Acquisition and Newcourt Acquisition

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

The idea behind XPAC Acquisition Corp and Newcourt Acquisition Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.