Correlation Between DUET Acquisition and Merchants Bancorp

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

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

Diversification Opportunities for DUET Acquisition and Merchants Bancorp

0.0

Correlation Coefficient

DUET Acquisition  Merchants Bancorp

Pay attention - limited upside

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

Pair Corralation between DUET Acquisition and Merchants Bancorp

If you would invest  4,118  in Merchants Bancorp on November 28, 2024 and sell it today you would earn a total of  35.00  from holding Merchants Bancorp or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

DUET Acquisition Corp  vs.  Merchants Bancorp

DUET Acquisition Corp

Risk-Adjusted Performance

Very Weak

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

Merchants Bancorp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merchants Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Merchants Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DUET Acquisition and Merchants Bancorp

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

The idea behind DUET Acquisition Corp and Merchants Bancorp 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.