Correlation Between Compass Digital and Marblegate Acquisition

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

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

Diversification Opportunities for Compass Digital and Marblegate Acquisition

-0.31

Correlation Coefficient

Compass Digital  Marblegate Acquisition

Very good diversification

The 3 months correlation between Compass and Marblegate is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Compass Digital Acquisition and Marblegate Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marblegate Acquisition and Compass Digital 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 Compass Digital Acquisition are associated (or correlated) with Marblegate Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marblegate Acquisition has no effect on the direction of Compass Digital i.e., Compass Digital and Marblegate Acquisition go up and down completely randomly.

Pair Corralation between Compass Digital and Marblegate Acquisition

Assuming the 90 days horizon Compass Digital is expected to generate 1.26 times less return on investment than Marblegate Acquisition. But when comparing it to its historical volatility, Compass Digital Acquisition is 1.91 times less risky than Marblegate Acquisition. It trades about 0.02 of its potential returns per unit of risk. Marblegate Acquisition Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,116  in Marblegate Acquisition Corp on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Marblegate Acquisition Corp or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	62.5%
Values	Daily Returns

Compass Digital Acquisition  vs.  Marblegate Acquisition Corp

Compass Digital Acqu

Risk-Adjusted Performance

0 of 100

Weak

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

Marblegate Acquisition

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marblegate Acquisition Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Marblegate 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 Compass Digital and Marblegate Acquisition

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

The idea behind Compass Digital Acquisition and Marblegate 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.