Correlation Between Embrace Change and Strats SM

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

By analyzing existing cross correlation between Embrace Change Acquisition and Strats SM Trust, you can compare the effects of market volatilities on Embrace Change and Strats SM 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 Embrace Change with a short position of Strats SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Strats SM.

Diversification Opportunities for Embrace Change and Strats SM

-0.35

Correlation Coefficient

Embrace Change  Strats SM

Very good diversification

The 3 months correlation between Embrace and Strats is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Strats SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strats SM Trust and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Strats SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strats SM Trust has no effect on the direction of Embrace Change i.e., Embrace Change and Strats SM go up and down completely randomly.

Pair Corralation between Embrace Change and Strats SM

Assuming the 90 days horizon Embrace Change Acquisition is expected to generate 65.43 times more return on investment than Strats SM. However, Embrace Change is 65.43 times more volatile than Strats SM Trust. It trades about 0.14 of its potential returns per unit of risk. Strats SM Trust is currently generating about 0.03 per unit of risk. If you would invest  9.30  in Embrace Change Acquisition on October 11, 2024 and sell it today you would lose (1.30) from holding Embrace Change Acquisition or give up 13.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Embrace Change Acquisition  vs.  Strats SM Trust

Embrace Change Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Strats SM Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Embrace Change and Strats SM

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

The idea behind Embrace Change Acquisition and Strats SM Trust 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.