Correlation Between FACT II and Colombier Acquisition

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

Diversification Opportunities for FACT II and Colombier Acquisition

-0.05

Correlation Coefficient

FACT II  Colombier Acquisition

Good diversification

The 3 months correlation between FACT and Colombier is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and Colombier Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colombier Acquisition 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 Colombier Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colombier Acquisition has no effect on the direction of FACT II i.e., FACT II and Colombier Acquisition go up and down completely randomly.

Pair Corralation between FACT II and Colombier Acquisition

Given the investment horizon of 90 days FACT II Acquisition is expected to generate 11.55 times more return on investment than Colombier Acquisition. However, FACT II is 11.55 times more volatile than Colombier Acquisition Corp. It trades about 0.05 of its potential returns per unit of risk. Colombier Acquisition Corp is currently generating about -0.2 per unit of risk. If you would invest  991.00  in FACT II Acquisition on December 20, 2024 and sell it today you would earn a total of  10.00  from holding FACT II Acquisition or generate 1.01% return on investment over 90 days.

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

FACT II Acquisition  vs.  Colombier Acquisition Corp

FACT II Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, FACT II unveiled solid returns over the last few months and may actually be approaching a breakup point.

Colombier Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Colombier Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with FACT II and Colombier Acquisition

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

The idea behind FACT II Acquisition and Colombier 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.