Correlation Between FACT II and CF Acquisition

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

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

Diversification Opportunities for FACT II and CF Acquisition

0.0

Correlation Coefficient

FACT II  CF Acquisition

Pay attention - limited upside

The 3 months correlation between FACT and CFFE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp and FACT II 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 FACT II Acquisition are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of FACT II i.e., FACT II and CF Acquisition go up and down completely randomly.

Pair Corralation between FACT II and CF Acquisition

If you would invest  991.00  in FACT II Acquisition on October 9, 2024 and sell it today you would lose (33.00) from holding FACT II Acquisition or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	10.0%
Values	Daily Returns

FACT II Acquisition  vs.  CF Acquisition Corp

FACT II Acquisition

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, FACT II may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CF Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CF Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CF Acquisition is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with FACT II and CF Acquisition

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

The idea behind FACT II Acquisition and CF Acquisition 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.