Correlation Between Embrace Change and Tri Continental

Can any of the company-specific risk be diversified away by investing in both Embrace Change and Tri Continental 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 Embrace Change and Tri Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Embrace Change Acquisition and Tri Continental Closed, you can compare the effects of market volatilities on Embrace Change and Tri Continental 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 Embrace Change with a short position of Tri Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Tri Continental.

Diversification Opportunities for Embrace Change and Tri Continental

-0.37

Correlation Coefficient

Embrace Change  Tri Continental

Very good diversification

The 3 months correlation between Embrace and Tri is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Tri Continental Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental Closed and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Tri Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental Closed has no effect on the direction of Embrace Change i.e., Embrace Change and Tri Continental go up and down completely randomly.

Pair Corralation between Embrace Change and Tri Continental

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 481.49 times more return on investment than Tri Continental. However, Embrace Change is 481.49 times more volatile than Tri Continental Closed. It trades about 0.39 of its potential returns per unit of risk. Tri Continental Closed is currently generating about 0.12 per unit of risk. If you would invest  0.00  in Embrace Change Acquisition on July 30, 2024 and sell it today you would earn a total of  15.00  from holding Embrace Change Acquisition or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.06%
Values	Daily Returns

Embrace Change Acquisition  vs.  Tri Continental Closed

Embrace Change Acqui

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unsteady technical and fundamental indicators, Embrace Change reported solid returns over the last few months and may actually be approaching a breakup point.

Tri Continental Closed

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tri Continental Closed are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Tri Continental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Embrace Change and Tri Continental

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

The idea behind Embrace Change Acquisition and Tri Continental Closed 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.