Correlation Between MGP Ingredients and A SPAC

Can any of the company-specific risk be diversified away by investing in both MGP Ingredients and A SPAC 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 MGP Ingredients and A SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MGP Ingredients and A SPAC III, you can compare the effects of market volatilities on MGP Ingredients and A SPAC 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 MGP Ingredients with a short position of A SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGP Ingredients and A SPAC.

Diversification Opportunities for MGP Ingredients and A SPAC

-0.29

Correlation Coefficient

MGP Ingredients  A SPAC

Very good diversification

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

Pair Corralation between MGP Ingredients and A SPAC

Given the investment horizon of 90 days MGP Ingredients is expected to under-perform the A SPAC. In addition to that, MGP Ingredients is 17.52 times more volatile than A SPAC III. It trades about -0.1 of its total potential returns per unit of risk. A SPAC III is currently generating about 0.13 per unit of volatility. If you would invest  1,015  in A SPAC III on May 13, 2025 and sell it today you would earn a total of  12.00  from holding A SPAC III or generate 1.18% return on investment over 90 days.

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

MGP Ingredients  vs.  A SPAC III

MGP Ingredients

Risk-Adjusted Performance

Weakest

Over the last 90 days MGP Ingredients has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

A SPAC III

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in A SPAC III are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, A SPAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MGP Ingredients and A SPAC

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

The idea behind MGP Ingredients and A SPAC III 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.