Correlation Between ESGEN Acquisition and American Acquisition

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

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

Diversification Opportunities for ESGEN Acquisition and American Acquisition

0.41

Correlation Coefficient

ESGEN Acquisition  American Acquisition

Very weak diversification

The 3 months correlation between ESGEN and American is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ESGEN Acquisition Corp and American Acquisition Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Acquisition and ESGEN 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 ESGEN Acquisition Corp are associated (or correlated) with American Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Acquisition has no effect on the direction of ESGEN Acquisition i.e., ESGEN Acquisition and American Acquisition go up and down completely randomly.

Pair Corralation between ESGEN Acquisition and American Acquisition

If you would invest  1,082  in American Acquisition Opportunity on October 8, 2024 and sell it today you would earn a total of  0.00  from holding American Acquisition Opportunity or generate 0.0% return on investment over 90 days.

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

ESGEN Acquisition Corp  vs.  American Acquisition Opportuni

ESGEN Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ESGEN Acquisition and American Acquisition

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

The idea behind ESGEN Acquisition Corp and American Acquisition Opportunity 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.