Correlation Between Clover Leaf and Breeze Holdings

Can any of the company-specific risk be diversified away by investing in both Clover Leaf and Breeze Holdings 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 Clover Leaf and Breeze Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clover Leaf Capital and Breeze Holdings Acquisition, you can compare the effects of market volatilities on Clover Leaf and Breeze Holdings 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 Clover Leaf with a short position of Breeze Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clover Leaf and Breeze Holdings.

Diversification Opportunities for Clover Leaf and Breeze Holdings

0.3

Correlation Coefficient

Clover Leaf  Breeze Holdings

Weak diversification

The 3 months correlation between Clover and Breeze is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Clover Leaf Capital and Breeze Holdings Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Breeze Holdings Acqu and Clover Leaf 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 Clover Leaf Capital are associated (or correlated) with Breeze Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Breeze Holdings Acqu has no effect on the direction of Clover Leaf i.e., Clover Leaf and Breeze Holdings go up and down completely randomly.

Pair Corralation between Clover Leaf and Breeze Holdings

Assuming the 90 days horizon Clover Leaf is expected to generate 10.94 times less return on investment than Breeze Holdings. But when comparing it to its historical volatility, Clover Leaf Capital is 7.74 times less risky than Breeze Holdings. It trades about 0.04 of its potential returns per unit of risk. Breeze Holdings Acquisition is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Breeze Holdings Acquisition on October 26, 2024 and sell it today you would lose (4.00) from holding Breeze Holdings Acquisition or give up 26.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.57%
Values	Daily Returns

Clover Leaf Capital  vs.  Breeze Holdings Acquisition

Clover Leaf Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Breeze Holdings Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Breeze Holdings Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Breeze Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Clover Leaf and Breeze Holdings

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

The idea behind Clover Leaf Capital and Breeze Holdings Acquisition 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.