Correlation Between Gores Holdings and Bannix Acquisition

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

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

Diversification Opportunities for Gores Holdings and Bannix Acquisition

-0.13

Correlation Coefficient

Gores Holdings  Bannix Acquisition

Good diversification

The 3 months correlation between Gores and Bannix is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Gores Holdings IX and Bannix Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannix Acquisition Corp and Gores Holdings 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 Gores Holdings IX are associated (or correlated) with Bannix Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannix Acquisition Corp has no effect on the direction of Gores Holdings i.e., Gores Holdings and Bannix Acquisition go up and down completely randomly.

Pair Corralation between Gores Holdings and Bannix Acquisition

Given the investment horizon of 90 days Gores Holdings IX is expected to under-perform the Bannix Acquisition. In addition to that, Gores Holdings is 5.92 times more volatile than Bannix Acquisition Corp. It trades about -0.31 of its total potential returns per unit of risk. Bannix Acquisition Corp is currently generating about -0.16 per unit of volatility. If you would invest  1,125  in Bannix Acquisition Corp on September 17, 2024 and sell it today you would lose (4.70) from holding Bannix Acquisition Corp or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Gores Holdings IX  vs.  Bannix Acquisition Corp

Gores Holdings IX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gores Holdings IX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Gores Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Bannix Acquisition Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bannix Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Bannix Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gores Holdings and Bannix Acquisition

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

The idea behind Gores Holdings IX and Bannix 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.