Correlation Between ALCC Old and Newcourt Acquisition

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

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

Diversification Opportunities for ALCC Old and Newcourt Acquisition

-0.06

Correlation Coefficient

ALCC Old  Newcourt Acquisition

Good diversification

The 3 months correlation between ALCC and Newcourt is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ALCC Old and Newcourt Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcourt Acquisition Corp and ALCC Old 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 ALCC Old are associated (or correlated) with Newcourt Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcourt Acquisition Corp has no effect on the direction of ALCC Old i.e., ALCC Old and Newcourt Acquisition go up and down completely randomly.

Pair Corralation between ALCC Old and Newcourt Acquisition

Given the investment horizon of 90 days ALCC Old is expected to generate 1.6 times less return on investment than Newcourt Acquisition. In addition to that, ALCC Old is 1.11 times more volatile than Newcourt Acquisition Corp. It trades about 0.07 of its total potential returns per unit of risk. Newcourt Acquisition Corp is currently generating about 0.13 per unit of volatility. If you would invest  1,041  in Newcourt Acquisition Corp on October 11, 2024 and sell it today you would earn a total of  60.00  from holding Newcourt Acquisition Corp or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.64%
Values	Daily Returns

ALCC Old  vs.  Newcourt Acquisition Corp

ALCC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALCC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ALCC Old is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Newcourt Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcourt Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Newcourt Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ALCC Old and Newcourt Acquisition

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

The idea behind ALCC Old and Newcourt 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 Transaction History module to view history of all your transactions and understand their impact on performance.