Correlation Between M3 Brigade and PowerUp Acquisition

Can any of the company-specific risk be diversified away by investing in both M3 Brigade and PowerUp 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 M3 Brigade and PowerUp Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between M3 Brigade Acquisition V and PowerUp Acquisition Corp, you can compare the effects of market volatilities on M3 Brigade and PowerUp 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 M3 Brigade with a short position of PowerUp Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Brigade and PowerUp Acquisition.

Diversification Opportunities for M3 Brigade and PowerUp Acquisition

-0.22

Correlation Coefficient

M3 Brigade  PowerUp Acquisition

Very good diversification

The 3 months correlation between MBAV and PowerUp is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding M3 Brigade Acquisition V and PowerUp Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerUp Acquisition Corp and M3 Brigade 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 M3 Brigade Acquisition V are associated (or correlated) with PowerUp Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerUp Acquisition Corp has no effect on the direction of M3 Brigade i.e., M3 Brigade and PowerUp Acquisition go up and down completely randomly.

Pair Corralation between M3 Brigade and PowerUp Acquisition

Given the investment horizon of 90 days M3 Brigade is expected to generate 12.05 times less return on investment than PowerUp Acquisition. But when comparing it to its historical volatility, M3 Brigade Acquisition V is 17.85 times less risky than PowerUp Acquisition. It trades about 0.32 of its potential returns per unit of risk. PowerUp Acquisition Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,145  in PowerUp Acquisition Corp on September 22, 2024 and sell it today you would earn a total of  55.00  from holding PowerUp Acquisition Corp or generate 4.8% return on investment over 90 days.

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

M3 Brigade Acquisition V  vs.  PowerUp Acquisition Corp

M3 Brigade Acquisition

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Brigade Acquisition V are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, M3 Brigade is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

PowerUp Acquisition Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PowerUp Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, PowerUp Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with M3 Brigade and PowerUp Acquisition

The main advantage of trading using opposite M3 Brigade and PowerUp Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Brigade position performs unexpectedly, PowerUp 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 PowerUp Acquisition will offset losses from the drop in PowerUp Acquisition's long position.

The idea behind M3 Brigade Acquisition V and PowerUp 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 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.