Correlation Between Bayview Acquisition and Core Bond

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

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

Diversification Opportunities for Bayview Acquisition and Core Bond

0.22

Correlation Coefficient

Bayview Acquisition  Core Bond

Modest diversification

The 3 months correlation between Bayview and Core is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bayview Acquisition Corp and Core Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Bond Fund and Bayview 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 Bayview Acquisition Corp are associated (or correlated) with Core Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Bond Fund has no effect on the direction of Bayview Acquisition i.e., Bayview Acquisition and Core Bond go up and down completely randomly.

Pair Corralation between Bayview Acquisition and Core Bond

Assuming the 90 days horizon Bayview Acquisition Corp is expected to generate 1.5 times more return on investment than Core Bond. However, Bayview Acquisition is 1.5 times more volatile than Core Bond Fund. It trades about 0.05 of its potential returns per unit of risk. Core Bond Fund is currently generating about -0.09 per unit of risk. If you would invest  1,080  in Bayview Acquisition Corp on October 7, 2024 and sell it today you would earn a total of  11.00  from holding Bayview Acquisition Corp or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bayview Acquisition Corp  vs.  Core Bond Fund

Bayview Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Core Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Core Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bayview Acquisition and Core Bond

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

The idea behind Bayview Acquisition Corp and Core Bond Fund 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.