Correlation Between AlphaTime Acquisition and Merrill Lynch

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Can any of the company-specific risk be diversified away by investing in both AlphaTime Acquisition and Merrill Lynch 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 AlphaTime Acquisition and Merrill Lynch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AlphaTime Acquisition Corp and Merrill Lynch Depositor, you can compare the effects of market volatilities on AlphaTime Acquisition and Merrill Lynch 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 AlphaTime Acquisition with a short position of Merrill Lynch. Check out your portfolio center. Please also check ongoing floating volatility patterns of AlphaTime Acquisition and Merrill Lynch.

Diversification Opportunities for AlphaTime Acquisition and Merrill Lynch

AlphaTimeMerrillDiversified AwayAlphaTimeMerrillDiversified Away100%
-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between AlphaTime and Merrill is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding AlphaTime Acquisition Corp and Merrill Lynch Depositor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merrill Lynch Depositor and AlphaTime 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 AlphaTime Acquisition Corp are associated (or correlated) with Merrill Lynch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merrill Lynch Depositor has no effect on the direction of AlphaTime Acquisition i.e., AlphaTime Acquisition and Merrill Lynch go up and down completely randomly.

Pair Corralation between AlphaTime Acquisition and Merrill Lynch

Assuming the 90 days horizon AlphaTime Acquisition Corp is expected to under-perform the Merrill Lynch. In addition to that, AlphaTime Acquisition is 4.78 times more volatile than Merrill Lynch Depositor. It trades about -0.01 of its total potential returns per unit of risk. Merrill Lynch Depositor is currently generating about -0.01 per unit of volatility. If you would invest  2,576  in Merrill Lynch Depositor on September 23, 2024 and sell it today you would lose (74.00) from holding Merrill Lynch Depositor or give up 2.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy49.23%
ValuesDaily Returns

AlphaTime Acquisition Corp  vs.  Merrill Lynch Depositor

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -200204060
JavaScript chart by amCharts 3.21.15ATMCR IPB
       Timeline  
AlphaTime Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
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Over the last 90 days AlphaTime Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
Merrill Lynch Depositor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Merrill Lynch Depositor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Merrill Lynch is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec24.52525.52626.52727.5

AlphaTime Acquisition and Merrill Lynch Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-45.57-34.13-22.69-11.250.011.3822.9634.5346.11 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15ATMCR IPB
       Returns  

Pair Trading with AlphaTime Acquisition and Merrill Lynch

The main advantage of trading using opposite AlphaTime Acquisition and Merrill Lynch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AlphaTime Acquisition position performs unexpectedly, Merrill Lynch 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 Merrill Lynch will offset losses from the drop in Merrill Lynch's long position.
The idea behind AlphaTime Acquisition Corp and Merrill Lynch Depositor 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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