Correlation Between Edify Acquisition and Churchill Capital

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

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

Diversification Opportunities for Edify Acquisition and Churchill Capital

0.72
  Correlation Coefficient
Edify Acquisition Corp
Churchill Capital Corp

Poor diversification

The 3 months correlation between Edify and Churchill is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Edify Acquisition Corp and Churchill Capital Corp in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Churchill Capital Corp and Edify 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 Edify Acquisition Corp are associated (or correlated) with Churchill Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Churchill Capital Corp has no effect on the direction of Edify Acquisition i.e., Edify Acquisition and Churchill Capital go up and down completely randomly.

Pair Corralation between Edify Acquisition and Churchill Capital

Assuming the 90 days horizon Edify Acquisition Corp is expected to generate 1.64 times more return on investment than Churchill Capital. However, Edify Acquisition is 1.64 times more volatile than Churchill Capital Corp. It trades about 0.07 of its potential returns per unit of risk. Churchill Capital Corp is currently generating about 0.06 per unit of risk. If you would invest  988.00  in Edify Acquisition Corp on September 7, 2021 and sell it today you would earn a total of  12.00  from holding Edify Acquisition Corp or generate 1.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Edify Acquisition Corp  vs.  Churchill Capital Corp

 Performance (%) 
      Timeline 
Edify Acquisition Corp 
Edify Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Edify Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Edify Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Edify Price Channel

Churchill Capital Corp 
Churchill Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Churchill Capital Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Churchill Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Churchill Price Channel

Edify Acquisition and Churchill Capital Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Edify Acquisition and Churchill Capital

The main advantage of trading using opposite Edify Acquisition and Churchill Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edify Acquisition position performs unexpectedly, Churchill Capital 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 Churchill Capital will offset losses from the drop in Churchill Capital's long position.
The idea behind Edify Acquisition Corp and Churchill Capital 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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