Correlation Between Coliseum Acquisition and MOUNTAIN LAKE

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

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

Diversification Opportunities for Coliseum Acquisition and MOUNTAIN LAKE

0.62

Correlation Coefficient

Coliseum Acquisition  MOUNTAIN LAKE

Poor diversification

The 3 months correlation between Coliseum and MOUNTAIN is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Coliseum Acquisition Corp and MOUNTAIN LAKE ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOUNTAIN LAKE ACQUISITION and Coliseum 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 Coliseum Acquisition Corp are associated (or correlated) with MOUNTAIN LAKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOUNTAIN LAKE ACQUISITION has no effect on the direction of Coliseum Acquisition i.e., Coliseum Acquisition and MOUNTAIN LAKE go up and down completely randomly.

Pair Corralation between Coliseum Acquisition and MOUNTAIN LAKE

Given the investment horizon of 90 days Coliseum Acquisition Corp is expected to generate 0.42 times more return on investment than MOUNTAIN LAKE. However, Coliseum Acquisition Corp is 2.38 times less risky than MOUNTAIN LAKE. It trades about 0.05 of its potential returns per unit of risk. MOUNTAIN LAKE ACQUISITION is currently generating about 0.01 per unit of risk. If you would invest  1,007  in Coliseum Acquisition Corp on October 7, 2024 and sell it today you would earn a total of  144.00  from holding Coliseum Acquisition Corp or generate 14.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	22.47%
Values	Daily Returns

Coliseum Acquisition Corp  vs.  MOUNTAIN LAKE ACQUISITION

Coliseum Acquisition Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coliseum Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Coliseum Acquisition is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

MOUNTAIN LAKE ACQUISITION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MOUNTAIN LAKE ACQUISITION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, MOUNTAIN LAKE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coliseum Acquisition and MOUNTAIN LAKE

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

The idea behind Coliseum Acquisition Corp and MOUNTAIN LAKE 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.