Correlation Between Inflection Point and ClimateRock

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

By analyzing existing cross correlation between Inflection Point Acquisition and ClimateRock Class A, you can compare the effects of market volatilities on Inflection Point and ClimateRock 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 Inflection Point with a short position of ClimateRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflection Point and ClimateRock.

Diversification Opportunities for Inflection Point and ClimateRock

0.41

Correlation Coefficient

Inflection Point  ClimateRock

Very weak diversification

The 3 months correlation between Inflection and ClimateRock is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Inflection Point Acquisition and ClimateRock Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClimateRock Class and Inflection Point 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 Inflection Point Acquisition are associated (or correlated) with ClimateRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClimateRock Class has no effect on the direction of Inflection Point i.e., Inflection Point and ClimateRock go up and down completely randomly.

Pair Corralation between Inflection Point and ClimateRock

Assuming the 90 days horizon Inflection Point Acquisition is expected to generate 10.18 times more return on investment than ClimateRock. However, Inflection Point is 10.18 times more volatile than ClimateRock Class A. It trades about 0.04 of its potential returns per unit of risk. ClimateRock Class A is currently generating about 0.07 per unit of risk. If you would invest  1,100  in Inflection Point Acquisition on November 28, 2024 and sell it today you would earn a total of  60.00  from holding Inflection Point Acquisition or generate 5.45% return on investment over 90 days.

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

Inflection Point Acquisition  vs.  ClimateRock Class A

Inflection Point Acq

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inflection Point Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inflection Point unveiled solid returns over the last few months and may actually be approaching a breakup point.

ClimateRock Class

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ClimateRock Class A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ClimateRock is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Inflection Point and ClimateRock

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

The idea behind Inflection Point Acquisition and ClimateRock Class A 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..