Correlation Between Dexterra and Alignvest Acquisition

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

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

Diversification Opportunities for Dexterra and Alignvest Acquisition

0.17

Correlation Coefficient

Dexterra  Alignvest Acquisition

Average diversification

The 3 months correlation between Dexterra and Alignvest is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dexterra Group and Alignvest Acquisition II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alignvest Acquisition and Dexterra 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 Dexterra Group are associated (or correlated) with Alignvest Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alignvest Acquisition has no effect on the direction of Dexterra i.e., Dexterra and Alignvest Acquisition go up and down completely randomly.

Pair Corralation between Dexterra and Alignvest Acquisition

Assuming the 90 days trading horizon Dexterra Group is expected to under-perform the Alignvest Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Dexterra Group is 1.75 times less risky than Alignvest Acquisition. The stock trades about 0.0 of its potential returns per unit of risk. The Alignvest Acquisition II is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Alignvest Acquisition II on December 25, 2024 and sell it today you would earn a total of  138.00  from holding Alignvest Acquisition II or generate 22.08% return on investment over 90 days.

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

Dexterra Group  vs.  Alignvest Acquisition II

Dexterra Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dexterra Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dexterra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Alignvest Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alignvest Acquisition II are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Alignvest Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dexterra and Alignvest Acquisition

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

The idea behind Dexterra Group and Alignvest Acquisition II 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.