Correlation Between Jupiter Acquisition and Forum Merger

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Can any of the company-specific risk be diversified away by investing in both Jupiter Acquisition and Forum Merger 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 Jupiter Acquisition and Forum Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jupiter Acquisition Corp and Forum Merger IV, you can compare the effects of market volatilities on Jupiter Acquisition and Forum Merger 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 Jupiter Acquisition with a short position of Forum Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jupiter Acquisition and Forum Merger.

Diversification Opportunities for Jupiter Acquisition and Forum Merger

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Jupiter and Forum is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Jupiter Acquisition Corp and Forum Merger IV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Merger IV and Jupiter 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 Jupiter Acquisition Corp are associated (or correlated) with Forum Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Merger IV has no effect on the direction of Jupiter Acquisition i.e., Jupiter Acquisition and Forum Merger go up and down completely randomly.

Pair Corralation between Jupiter Acquisition and Forum Merger

Assuming the 90 days horizon Jupiter Acquisition Corp is expected to generate 1.3 times more return on investment than Forum Merger. However, Jupiter Acquisition is 1.3 times more volatile than Forum Merger IV. It trades about 0.17 of its potential returns per unit of risk. Forum Merger IV is currently generating about 0.14 per unit of risk. If you would invest  1,001  in Jupiter Acquisition Corp on October 5, 2024 and sell it today you would earn a total of  39.00  from holding Jupiter Acquisition Corp or generate 3.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy94.44%
ValuesDaily Returns

Jupiter Acquisition Corp  vs.  Forum Merger IV

 Performance 
       Timeline  
Jupiter Acquisition Corp 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Jupiter Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Jupiter Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Forum Merger IV 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Forum Merger IV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Forum Merger is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jupiter Acquisition and Forum Merger Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jupiter Acquisition and Forum Merger

The main advantage of trading using opposite Jupiter Acquisition and Forum Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jupiter Acquisition position performs unexpectedly, Forum Merger 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 Forum Merger will offset losses from the drop in Forum Merger's long position.
The idea behind Jupiter Acquisition Corp and Forum Merger IV 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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