Correlation Between New Providence and Bleuacacia

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

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

Diversification Opportunities for New Providence and Bleuacacia

0.0

Correlation Coefficient

New Providence  Bleuacacia

Pay attention - limited upside

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

Pair Corralation between New Providence and Bleuacacia

If you would invest (100.00) in Bleuacacia Ltd Warrants on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Bleuacacia Ltd Warrants or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

New Providence Acquisition  vs.  Bleuacacia Ltd Warrants

New Providence Acqui

Risk-Adjusted Performance

Very Weak

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

Bleuacacia Warrants

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bleuacacia Ltd Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bleuacacia 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 New Providence and Bleuacacia

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

The idea behind New Providence Acquisition and Bleuacacia Ltd Warrants 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.