Correlation Between Ares AcquisitionII and Berenson Acquisition

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

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

Diversification Opportunities for Ares AcquisitionII and Berenson Acquisition

0.01

Correlation Coefficient

Ares AcquisitionII  Berenson Acquisition

Significant diversification

The 3 months correlation between Ares and Berenson is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ares Acquisition and Berenson Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berenson Acquisition Corp and Ares AcquisitionII 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 Ares Acquisition are associated (or correlated) with Berenson Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berenson Acquisition Corp has no effect on the direction of Ares AcquisitionII i.e., Ares AcquisitionII and Berenson Acquisition go up and down completely randomly.

Pair Corralation between Ares AcquisitionII and Berenson Acquisition

Assuming the 90 days trading horizon Ares Acquisition is expected to generate 1.34 times more return on investment than Berenson Acquisition. However, Ares AcquisitionII is 1.34 times more volatile than Berenson Acquisition Corp. It trades about 0.07 of its potential returns per unit of risk. Berenson Acquisition Corp is currently generating about 0.06 per unit of risk. If you would invest  1,058  in Ares Acquisition on October 24, 2024 and sell it today you would earn a total of  82.00  from holding Ares Acquisition or generate 7.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.51%
Values	Daily Returns

Ares Acquisition  vs.  Berenson Acquisition Corp

Ares AcquisitionII

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Ares AcquisitionII is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Berenson Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berenson Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Berenson Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ares AcquisitionII and Berenson Acquisition

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

The idea behind Ares Acquisition and Berenson Acquisition Corp 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.