Correlation Between Spear Alpha and SPAC

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

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

Diversification Opportunities for Spear Alpha and SPAC

-0.12

Correlation Coefficient

Spear Alpha  SPAC

Good diversification

The 3 months correlation between Spear and SPAC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Spear Alpha ETF and SPAC and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAC and New and Spear Alpha 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 Spear Alpha ETF are associated (or correlated) with SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAC and New has no effect on the direction of Spear Alpha i.e., Spear Alpha and SPAC go up and down completely randomly.

Pair Corralation between Spear Alpha and SPAC

Given the investment horizon of 90 days Spear Alpha ETF is expected to generate 4.52 times more return on investment than SPAC. However, Spear Alpha is 4.52 times more volatile than SPAC and New. It trades about 0.26 of its potential returns per unit of risk. SPAC and New is currently generating about 0.02 per unit of risk. If you would invest  3,042  in Spear Alpha ETF on July 16, 2025 and sell it today you would earn a total of  1,196  from holding Spear Alpha ETF or generate 39.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Spear Alpha ETF  vs.  SPAC and New

Spear Alpha ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spear Alpha ETF are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Spear Alpha showed solid returns over the last few months and may actually be approaching a breakup point.

SPAC and New

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPAC and New are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SPAC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spear Alpha and SPAC

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

The idea behind Spear Alpha ETF and SPAC and New 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 Correlations module to find global opportunities by holding instruments from different markets.