Correlation Between Mercato Partners and Jupiter Acquisition

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

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

Diversification Opportunities for Mercato Partners and Jupiter Acquisition

0.43

Correlation Coefficient

Mercato Partners  Jupiter Acquisition

Very weak diversification

The 3 months correlation between Mercato and Jupiter is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mercato Partners Acquisition and Jupiter Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Acquisition and Mercato Partners 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 Mercato Partners Acquisition are associated (or correlated) with Jupiter Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Acquisition has no effect on the direction of Mercato Partners i.e., Mercato Partners and Jupiter Acquisition go up and down completely randomly.

Pair Corralation between Mercato Partners and Jupiter Acquisition

If you would invest  2.50  in Jupiter Acquisition on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Jupiter Acquisition or generate 0.0% return on investment over 90 days.

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

Mercato Partners Acquisition  vs.  Jupiter Acquisition

Mercato Partners Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercato Partners Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mercato Partners is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Jupiter Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jupiter Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Jupiter Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mercato Partners and Jupiter Acquisition

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

The idea behind Mercato Partners Acquisition and Jupiter 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.