Correlation Between Software Acquisition and Marcus

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

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

Diversification Opportunities for Software Acquisition and Marcus

0.25

Correlation Coefficient

Software Acquisition  Marcus

Modest diversification

The 3 months correlation between Software and Marcus is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus and Software 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 Software Acquisition Group are associated (or correlated) with Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of Software Acquisition i.e., Software Acquisition and Marcus go up and down completely randomly.

Pair Corralation between Software Acquisition and Marcus

Assuming the 90 days horizon Software Acquisition Group is expected to generate 10.82 times more return on investment than Marcus. However, Software Acquisition is 10.82 times more volatile than Marcus. It trades about 0.15 of its potential returns per unit of risk. Marcus is currently generating about -0.05 per unit of risk. If you would invest  1.59  in Software Acquisition Group on May 4, 2025 and sell it today you would earn a total of  0.40  from holding Software Acquisition Group or generate 25.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	43.55%
Values	Daily Returns

Software Acquisition Group  vs.  Marcus

Software Acquisition

Risk-Adjusted Performance

Good

Over the last 90 days Software Acquisition Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak technical and fundamental indicators, Software Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Marcus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marcus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Software Acquisition and Marcus

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

The idea behind Software Acquisition Group and Marcus 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.