Correlation Between ESH Acquisition and Bleuacacia

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

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

Diversification Opportunities for ESH Acquisition and Bleuacacia

-0.56

Correlation Coefficient

ESH Acquisition  Bleuacacia

Excellent diversification

The 3 months correlation between ESH and Bleuacacia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ESH Acquisition Corp and bleuacacia ltd Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on bleuacacia ltd Warrants and ESH 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 ESH Acquisition Corp are associated (or correlated) with Bleuacacia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of bleuacacia ltd Warrants has no effect on the direction of ESH Acquisition i.e., ESH Acquisition and Bleuacacia go up and down completely randomly.

Pair Corralation between ESH Acquisition and Bleuacacia

Given the investment horizon of 90 days ESH Acquisition is expected to generate 1281.23 times less return on investment than Bleuacacia. But when comparing it to its historical volatility, ESH Acquisition Corp is 707.57 times less risky than Bleuacacia. It trades about 0.09 of its potential returns per unit of risk. bleuacacia ltd Warrants is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.50  in bleuacacia ltd Warrants on September 14, 2024 and sell it today you would lose (0.53) from holding bleuacacia ltd Warrants or give up 35.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	58.47%
Values	Daily Returns

ESH Acquisition Corp  vs.  bleuacacia ltd Warrants

ESH Acquisition Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESH Acquisition Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, ESH Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

bleuacacia ltd Warrants

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days bleuacacia ltd Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Bleuacacia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ESH Acquisition and Bleuacacia

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

The idea behind ESH Acquisition Corp and bleuacacia ltd Warrants 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.