Correlation Between Gores Holdings and Broad Capital

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

Diversification Opportunities for Gores Holdings and Broad Capital

0.12

Correlation Coefficient

Gores Holdings  Broad Capital

Average diversification

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

Pair Corralation between Gores Holdings and Broad Capital

Given the investment horizon of 90 days Gores Holdings IX is expected to under-perform the Broad Capital. In addition to that, Gores Holdings is 1.94 times more volatile than Broad Capital Acquisition. It trades about -0.17 of its total potential returns per unit of risk. Broad Capital Acquisition is currently generating about -0.04 per unit of volatility. If you would invest  1,137  in Broad Capital Acquisition on September 18, 2024 and sell it today you would lose (6.00) from holding Broad Capital Acquisition or give up 0.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Gores Holdings IX  vs.  Broad Capital Acquisition

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.

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gores Holdings and Broad Capital

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

The idea behind Gores Holdings IX and Broad Capital 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.