Correlation Between FG Acquisition and Morguard North

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

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

Diversification Opportunities for FG Acquisition and Morguard North

-0.54

Correlation Coefficient

FG Acquisition  Morguard North

Excellent diversification

The 3 months correlation between FGAA-U and Morguard is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding FG Acquisition Corp and Morguard North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morguard North American and FG 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 FG Acquisition Corp are associated (or correlated) with Morguard North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morguard North American has no effect on the direction of FG Acquisition i.e., FG Acquisition and Morguard North go up and down completely randomly.

Pair Corralation between FG Acquisition and Morguard North

Assuming the 90 days trading horizon FG Acquisition Corp is expected to generate 0.49 times more return on investment than Morguard North. However, FG Acquisition Corp is 2.02 times less risky than Morguard North. It trades about 0.26 of its potential returns per unit of risk. Morguard North American is currently generating about 0.02 per unit of risk. If you would invest  1,019  in FG Acquisition Corp on September 28, 2024 and sell it today you would earn a total of  159.00  from holding FG Acquisition Corp or generate 15.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	81.73%
Values	Daily Returns

FG Acquisition Corp  vs.  Morguard North American

FG Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FG Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FG Acquisition is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Morguard North American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morguard North American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with FG Acquisition and Morguard North

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

The idea behind FG Acquisition Corp and Morguard North American 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.