Correlation Between Metals Acquisition and Gores Holdings

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

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

Diversification Opportunities for Metals Acquisition and Gores Holdings

0.0

Correlation Coefficient

Metals Acquisition  Gores Holdings

Pay attention - limited upside

The 3 months correlation between Metals and Gores is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metals Acquisition Limited and Gores Holdings IX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gores Holdings IX and Metals 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 Metals Acquisition Limited are associated (or correlated) with Gores Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gores Holdings IX has no effect on the direction of Metals Acquisition i.e., Metals Acquisition and Gores Holdings go up and down completely randomly.

Pair Corralation between Metals Acquisition and Gores Holdings

Given the investment horizon of 90 days Metals Acquisition Limited is expected to generate 3.91 times more return on investment than Gores Holdings. However, Metals Acquisition is 3.91 times more volatile than Gores Holdings IX. It trades about 0.1 of its potential returns per unit of risk. Gores Holdings IX is currently generating about -0.31 per unit of risk. If you would invest  1,159  in Metals Acquisition Limited on September 17, 2024 and sell it today you would earn a total of  61.00  from holding Metals Acquisition Limited or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Metals Acquisition Limited  vs.  Gores Holdings IX

Metals Acquisition

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Acquisition Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Metals Acquisition is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Gores Holdings IX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gores Holdings IX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Gores Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metals Acquisition and Gores Holdings

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

The idea behind Metals Acquisition Limited and Gores Holdings IX 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.