Correlation Between ESGEN Acquisition and Valuence Merger

Can any of the company-specific risk be diversified away by investing in both ESGEN Acquisition and Valuence Merger 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 Valuence Merger 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 Valuence Merger Corp, you can compare the effects of market volatilities on ESGEN Acquisition and Valuence Merger 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 Valuence Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGEN Acquisition and Valuence Merger.

Diversification Opportunities for ESGEN Acquisition and Valuence Merger

0.26

Correlation Coefficient

ESGEN Acquisition  Valuence Merger

Modest diversification

The 3 months correlation between ESGEN and Valuence is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ESGEN Acquisition Corp and Valuence Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valuence Merger Corp 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 Valuence Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valuence Merger Corp has no effect on the direction of ESGEN Acquisition i.e., ESGEN Acquisition and Valuence Merger go up and down completely randomly.

Pair Corralation between ESGEN Acquisition and Valuence Merger

Assuming the 90 days horizon ESGEN Acquisition Corp is expected to generate 3.87 times more return on investment than Valuence Merger. However, ESGEN Acquisition is 3.87 times more volatile than Valuence Merger Corp. It trades about 0.06 of its potential returns per unit of risk. Valuence Merger Corp is currently generating about 0.11 per unit of risk. If you would invest  1,034  in ESGEN Acquisition Corp on September 16, 2024 and sell it today you would earn a total of  67.00  from holding ESGEN Acquisition Corp or generate 6.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.03%
Values	Daily Returns

ESGEN Acquisition Corp  vs.  Valuence Merger Corp

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Valuence Merger Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valuence Merger Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Valuence Merger is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ESGEN Acquisition and Valuence Merger

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

The idea behind ESGEN Acquisition Corp and Valuence Merger Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.