Correlation Between Fifth Wall and Jaws Hurricane

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

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

Diversification Opportunities for Fifth Wall and Jaws Hurricane

-0.12

Correlation Coefficient

Fifth Wall  Jaws Hurricane

Good diversification

The 3 months correlation between Fifth and Jaws is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fifth Wall Acquisition and Jaws Hurricane Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Hurricane Acqui and Fifth Wall 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 Fifth Wall Acquisition are associated (or correlated) with Jaws Hurricane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Hurricane Acqui has no effect on the direction of Fifth Wall i.e., Fifth Wall and Jaws Hurricane go up and down completely randomly.

Pair Corralation between Fifth Wall and Jaws Hurricane

Given the investment horizon of 90 days Fifth Wall Acquisition is expected to generate 1.72 times more return on investment than Jaws Hurricane. However, Fifth Wall is 1.72 times more volatile than Jaws Hurricane Acquisition. It trades about 0.09 of its potential returns per unit of risk. Jaws Hurricane Acquisition is currently generating about 0.03 per unit of risk. If you would invest  1,004  in Fifth Wall Acquisition on September 20, 2024 and sell it today you would earn a total of  178.00  from holding Fifth Wall Acquisition or generate 17.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.82%
Values	Daily Returns

Fifth Wall Acquisition  vs.  Jaws Hurricane Acquisition

Fifth Wall Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jaws Hurricane Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaws Hurricane Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Jaws Hurricane is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fifth Wall and Jaws Hurricane

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

The idea behind Fifth Wall Acquisition and Jaws Hurricane Acquisition 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.