Correlation Between Evercore Partners and Cactus Acquisition

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

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

Diversification Opportunities for Evercore Partners and Cactus Acquisition

0.27

Correlation Coefficient

Evercore Partners  Cactus Acquisition

Modest diversification

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

Pair Corralation between Evercore Partners and Cactus Acquisition

Considering the 90-day investment horizon Evercore Partners is expected to generate 0.8 times more return on investment than Cactus Acquisition. However, Evercore Partners is 1.25 times less risky than Cactus Acquisition. It trades about 0.13 of its potential returns per unit of risk. Cactus Acquisition Corp is currently generating about 0.08 per unit of risk. If you would invest  18,113  in Evercore Partners on February 19, 2024 and sell it today you would earn a total of  2,235  from holding Evercore Partners or generate 12.34% return on investment over 90 days.

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

Evercore Partners  vs.  Cactus Acquisition Corp

Evercore Partners

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evercore Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Evercore Partners may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Cactus Acquisition Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cactus Acquisition Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cactus Acquisition may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Evercore Partners and Cactus Acquisition

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

The idea behind Evercore Partners and Cactus 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.