Correlation Between Arena Fortify and Crucible Acquisition

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Can any of the company-specific risk be diversified away by investing in both Arena Fortify and Crucible 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 Arena Fortify and Crucible Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arena Fortify Acquisition and Crucible Acquisition Corp, you can compare the effects of market volatilities on Arena Fortify and Crucible 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 Arena Fortify with a short position of Crucible Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arena Fortify and Crucible Acquisition.

Diversification Opportunities for Arena Fortify and Crucible Acquisition

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Arena and Crucible is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arena Fortify Acquisition and Crucible Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crucible Acquisition Corp and Arena Fortify 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 Arena Fortify Acquisition are associated (or correlated) with Crucible Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crucible Acquisition Corp has no effect on the direction of Arena Fortify i.e., Arena Fortify and Crucible Acquisition go up and down completely randomly.

Pair Corralation between Arena Fortify and Crucible Acquisition

Given the investment horizon of 90 days Arena Fortify Acquisition is expected to generate 0.51 times more return on investment than Crucible Acquisition. However, Arena Fortify Acquisition is 1.95 times less risky than Crucible Acquisition. It trades about 0.01 of its potential returns per unit of risk. Crucible Acquisition Corp is currently generating about -0.04 per unit of risk. If you would invest  1,000.00  in Arena Fortify Acquisition on May 20, 2022 and sell it today you would earn a total of  4.00  from holding Arena Fortify Acquisition or generate 0.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy42.09%
ValuesDaily Returns

Arena Fortify Acquisition  vs.  Crucible Acquisition Corp

 Performance (%) 
       Timeline  
Arena Fortify Acquisition 
Arena Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Arena Fortify Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Arena Fortify is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Arena Price Channel

Crucible Acquisition Corp 
Crucible Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Crucible Acquisition Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Crucible Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Crucible Price Channel

Arena Fortify and Crucible Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arena Fortify and Crucible Acquisition

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

Arena Fortify Acquisition

Pair trading matchups for Arena Fortify

The idea behind Arena Fortify Acquisition and Crucible 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.

Crucible Acquisition Corp

Pair trading matchups for Crucible Acquisition

Check out your portfolio center. 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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