Correlation Between FACT II and AA Mission

Can any of the company-specific risk be diversified away by investing in both FACT II and AA Mission 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 FACT II and AA Mission into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for FACT II and AA Mission

0.63

Correlation Coefficient

FACT II  AA Mission

Poor diversification

The 3 months correlation between FACT and AAM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and AA Mission Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AA Mission Acquisition and FACT II 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 FACT II Acquisition are associated (or correlated) with AA Mission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AA Mission Acquisition has no effect on the direction of FACT II i.e., FACT II and AA Mission go up and down completely randomly.

Pair Corralation between FACT II and AA Mission

Given the investment horizon of 90 days FACT II Acquisition is expected to generate 26.49 times more return on investment than AA Mission. However, FACT II is 26.49 times more volatile than AA Mission Acquisition. It trades about 0.08 of its potential returns per unit of risk. AA Mission Acquisition is currently generating about 0.11 per unit of risk. If you would invest  1,017  in FACT II Acquisition on May 20, 2025 and sell it today you would earn a total of  158.00  from holding FACT II Acquisition or generate 15.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

FACT II Acquisition  vs.  AA Mission Acquisition

FACT II Acquisition

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting fundamental indicators, FACT II unveiled solid returns over the last few months and may actually be approaching a breakup point.

AA Mission Acquisition

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in AA Mission Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AA Mission is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FACT II and AA Mission

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

The idea behind FACT II Acquisition and AA Mission Acquisition 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.