Correlation Between Aldel Financial and 90331HPL1

Can any of the company-specific risk be diversified away by investing in both Aldel Financial and 90331HPL1 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 Aldel Financial and 90331HPL1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aldel Financial II and US BANK NATIONAL, you can compare the effects of market volatilities on Aldel Financial and 90331HPL1 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 Aldel Financial with a short position of 90331HPL1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and 90331HPL1.

Diversification Opportunities for Aldel Financial and 90331HPL1

0.0

Correlation Coefficient

Aldel Financial  90331HPL1

Pay attention - limited upside

The 3 months correlation between Aldel and 90331HPL1 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and US BANK NATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US BANK NATIONAL and Aldel Financial 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 Aldel Financial II are associated (or correlated) with 90331HPL1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US BANK NATIONAL has no effect on the direction of Aldel Financial i.e., Aldel Financial and 90331HPL1 go up and down completely randomly.

Pair Corralation between Aldel Financial and 90331HPL1

Assuming the 90 days horizon Aldel Financial II is expected to generate 0.13 times more return on investment than 90331HPL1. However, Aldel Financial II is 7.72 times less risky than 90331HPL1. It trades about 0.1 of its potential returns per unit of risk. US BANK NATIONAL is currently generating about -0.11 per unit of risk. If you would invest  999.00  in Aldel Financial II on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Aldel Financial II or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

Aldel Financial II  vs.  US BANK NATIONAL

Aldel Financial II

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

US BANK NATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US BANK NATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 90331HPL1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aldel Financial and 90331HPL1

The main advantage of trading using opposite Aldel Financial and 90331HPL1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, 90331HPL1 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 90331HPL1 will offset losses from the drop in 90331HPL1's long position.

The idea behind Aldel Financial II and US BANK NATIONAL 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.