Correlation Between Cayson Acquisition and COPT Defense

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

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

Diversification Opportunities for Cayson Acquisition and COPT Defense

-0.29

Correlation Coefficient

Cayson Acquisition  COPT Defense

Very good diversification

The 3 months correlation between Cayson and COPT is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cayson Acquisition Corp and COPT Defense Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPT Defense Properties and Cayson 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 Cayson Acquisition Corp are associated (or correlated) with COPT Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPT Defense Properties has no effect on the direction of Cayson Acquisition i.e., Cayson Acquisition and COPT Defense go up and down completely randomly.

Pair Corralation between Cayson Acquisition and COPT Defense

Assuming the 90 days horizon Cayson Acquisition Corp is expected to generate 0.53 times more return on investment than COPT Defense. However, Cayson Acquisition Corp is 1.9 times less risky than COPT Defense. It trades about 0.11 of its potential returns per unit of risk. COPT Defense Properties is currently generating about 0.04 per unit of risk. If you would invest  1,000.00  in Cayson Acquisition Corp on February 7, 2025 and sell it today you would earn a total of  131.00  from holding Cayson Acquisition Corp or generate 13.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.85%
Values	Daily Returns

Cayson Acquisition Corp  vs.  COPT Defense Properties

Cayson Acquisition Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cayson Acquisition Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cayson Acquisition may actually be approaching a critical reversion point that can send shares even higher in June 2025.

COPT Defense Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days COPT Defense Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Cayson Acquisition and COPT Defense

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

The idea behind Cayson Acquisition Corp and COPT Defense Properties 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.