Correlation Between M3 Brigade and Vine Hill

Can any of the company-specific risk be diversified away by investing in both M3 Brigade and Vine Hill 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 Vine Hill 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 Vine Hill Capital, you can compare the effects of market volatilities on M3 Brigade and Vine Hill 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 Vine Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Brigade and Vine Hill.

Diversification Opportunities for M3 Brigade and Vine Hill

0.28

Correlation Coefficient

M3 Brigade  Vine Hill

Modest diversification

The 3 months correlation between MBAVW and Vine is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding M3 Brigade Acquisition V and Vine Hill Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vine Hill Capital 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 Vine Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vine Hill Capital has no effect on the direction of M3 Brigade i.e., M3 Brigade and Vine Hill go up and down completely randomly.

Pair Corralation between M3 Brigade and Vine Hill

Assuming the 90 days horizon M3 Brigade Acquisition V is expected to generate 64.95 times more return on investment than Vine Hill. However, M3 Brigade is 64.95 times more volatile than Vine Hill Capital. It trades about 0.17 of its potential returns per unit of risk. Vine Hill Capital is currently generating about 0.16 per unit of risk. If you would invest  15.00  in M3 Brigade Acquisition V on September 23, 2024 and sell it today you would earn a total of  2.00  from holding M3 Brigade Acquisition V or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

M3 Brigade Acquisition V  vs.  Vine Hill Capital

M3 Brigade Acquisition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M3 Brigade Acquisition V are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, M3 Brigade showed solid returns over the last few months and may actually be approaching a breakup point.

Vine Hill Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vine Hill Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Vine Hill is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with M3 Brigade and Vine Hill

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

The idea behind M3 Brigade Acquisition V and Vine Hill Capital 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..