Correlation Between Gores Holdings and Screaming Eagle

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

Diversification Opportunities for Gores Holdings and Screaming Eagle

-0.54

Correlation Coefficient

Gores Holdings  Screaming Eagle

Excellent diversification

The 3 months correlation between Gores and Screaming is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Gores Holdings IX and Screaming Eagle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Screaming Eagle Acqu 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 Screaming Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Screaming Eagle Acqu has no effect on the direction of Gores Holdings i.e., Gores Holdings and Screaming Eagle go up and down completely randomly.

Pair Corralation between Gores Holdings and Screaming Eagle

If you would invest  8.00  in Gores Holdings IX on September 12, 2024 and sell it today you would lose (7.50) from holding Gores Holdings IX or give up 93.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	3.85%
Values	Daily Returns

Gores Holdings IX  vs.  Screaming Eagle Acquisition

Gores Holdings IX

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gores Holdings IX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gores Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Screaming Eagle Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Screaming Eagle Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Screaming Eagle is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gores Holdings and Screaming Eagle

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

The idea behind Gores Holdings IX and Screaming Eagle 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.

Check out your portfolio center.

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.