Correlation Between Associated Capital and Gores Holdings

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

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

Diversification Opportunities for Associated Capital and Gores Holdings

-0.67

Correlation Coefficient

Associated Capital  Gores Holdings

Excellent diversification

The 3 months correlation between Associated and Gores is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Gores Holdings IX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gores Holdings IX and Associated Capital 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 Associated Capital Group are associated (or correlated) with Gores Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gores Holdings IX has no effect on the direction of Associated Capital i.e., Associated Capital and Gores Holdings go up and down completely randomly.

Pair Corralation between Associated Capital and Gores Holdings

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 182.99 times less return on investment than Gores Holdings. But when comparing it to its historical volatility, Associated Capital Group is 100.99 times less risky than Gores Holdings. It trades about 0.1 of its potential returns per unit of risk. Gores Holdings IX is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8.50  in Gores Holdings IX on September 5, 2024 and sell it today you would lose (7.81) from holding Gores Holdings IX or give up 91.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	43.75%
Values	Daily Returns

Associated Capital Group  vs.  Gores Holdings IX

Associated Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Gores Holdings IX

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gores Holdings IX are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gores Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Capital and Gores Holdings

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

The idea behind Associated Capital Group and Gores Holdings IX 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.