Correlation Between Graf Acquisition and Enterprise

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

By analyzing existing cross correlation between Graf Acquisition Corp and Enterprise 40 Technology, you can compare the effects of market volatilities on Graf Acquisition and Enterprise 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 Graf Acquisition with a short position of Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graf Acquisition and Enterprise.

Diversification Opportunities for Graf Acquisition and Enterprise

0.84

Correlation Coefficient

Graf Acquisition  Enterprise

Very poor diversification

The 3 months correlation between Graf and Enterprise is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Graf Acquisition Corp and Enterprise 40 Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise 40 Technology and Graf 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 Graf Acquisition Corp are associated (or correlated) with Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise 40 Technology has no effect on the direction of Graf Acquisition i.e., Graf Acquisition and Enterprise go up and down completely randomly.

Pair Corralation between Graf Acquisition and Enterprise

If you would invest  1,067  in Enterprise 40 Technology on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Enterprise 40 Technology or generate 0.0% return on investment over 90 days.

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

Graf Acquisition Corp  vs.  Enterprise 40 Technology

Graf Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graf Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Graf Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Enterprise 40 Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enterprise 40 Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Enterprise is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Graf Acquisition and Enterprise

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

The idea behind Graf Acquisition Corp and Enterprise 40 Technology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.