Correlation Between Blue Water and ProCap Acquisition

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

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

Diversification Opportunities for Blue Water and ProCap Acquisition

0.49

Correlation Coefficient

Blue Water  ProCap Acquisition

Very weak diversification

The 3 months correlation between Blue and ProCap is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Blue Water Acquisition and ProCap Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProCap Acquisition Corp and Blue Water 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 Blue Water Acquisition are associated (or correlated) with ProCap Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProCap Acquisition Corp has no effect on the direction of Blue Water i.e., Blue Water and ProCap Acquisition go up and down completely randomly.

Pair Corralation between Blue Water and ProCap Acquisition

Given the investment horizon of 90 days Blue Water Acquisition is expected to generate 0.39 times more return on investment than ProCap Acquisition. However, Blue Water Acquisition is 2.54 times less risky than ProCap Acquisition. It trades about 0.06 of its potential returns per unit of risk. ProCap Acquisition Corp is currently generating about -0.06 per unit of risk. If you would invest  998.00  in Blue Water Acquisition on August 19, 2025 and sell it today you would earn a total of  8.00  from holding Blue Water Acquisition or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	84.78%
Values	Daily Returns

Blue Water Acquisition  vs.  ProCap Acquisition Corp

Blue Water Acquisition

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Water Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Blue Water is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ProCap Acquisition Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days ProCap Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ProCap Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Blue Water and ProCap Acquisition

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

The idea behind Blue Water Acquisition and ProCap 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.