Correlation Between Nocturne Acquisition and Equity Bancshares

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

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

Diversification Opportunities for Nocturne Acquisition and Equity Bancshares

0.18

Correlation Coefficient

Nocturne Acquisition  Equity Bancshares

Average diversification

The 3 months correlation between Nocturne and Equity is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nocturne Acquisition Corp and Equity Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Bancshares and Nocturne 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 Nocturne Acquisition Corp are associated (or correlated) with Equity Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Bancshares has no effect on the direction of Nocturne Acquisition i.e., Nocturne Acquisition and Equity Bancshares go up and down completely randomly.

Pair Corralation between Nocturne Acquisition and Equity Bancshares

Given the investment horizon of 90 days Nocturne Acquisition Corp is expected to generate 0.51 times more return on investment than Equity Bancshares. However, Nocturne Acquisition Corp is 1.98 times less risky than Equity Bancshares. It trades about 0.06 of its potential returns per unit of risk. Equity Bancshares is currently generating about -0.01 per unit of risk. If you would invest  1,160  in Nocturne Acquisition Corp on January 24, 2024 and sell it today you would earn a total of  6.00  from holding Nocturne Acquisition Corp or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

Nocturne Acquisition Corp  vs.  Equity Bancshares

Nocturne Acquisition Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Nocturne Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Nocturne Acquisition may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Equity Bancshares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equity Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Equity Bancshares is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nocturne Acquisition and Equity Bancshares

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

The idea behind Nocturne Acquisition Corp and Equity Bancshares 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.