Correlation Between Newbury Street and Armada Acquisition

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

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

Diversification Opportunities for Newbury Street and Armada Acquisition

0.11

Correlation Coefficient

Newbury Street  Armada Acquisition

Average diversification

The 3 months correlation between Newbury and Armada is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Newbury Street Acquisition and Armada Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Acquisition Corp and Newbury Street 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 Newbury Street Acquisition are associated (or correlated) with Armada Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Acquisition Corp has no effect on the direction of Newbury Street i.e., Newbury Street and Armada Acquisition go up and down completely randomly.

Pair Corralation between Newbury Street and Armada Acquisition

Assuming the 90 days horizon Newbury Street Acquisition is expected to generate 22.08 times more return on investment than Armada Acquisition. However, Newbury Street is 22.08 times more volatile than Armada Acquisition Corp. It trades about 0.17 of its potential returns per unit of risk. Armada Acquisition Corp is currently generating about -0.07 per unit of risk. If you would invest  3.50  in Newbury Street Acquisition on October 3, 2024 and sell it today you would earn a total of  5.50  from holding Newbury Street Acquisition or generate 157.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.65%
Values	Daily Returns

Newbury Street Acquisition  vs.  Armada Acquisition Corp

Newbury Street Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

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

Armada Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Armada Acquisition 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 Newbury Street and Armada Acquisition

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

The idea behind Newbury Street Acquisition and Armada 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.