Correlation Between Rosecliff Acquisition and RMG Acquisition

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

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

Diversification Opportunities for Rosecliff Acquisition and RMG Acquisition

0.0

Correlation Coefficient

Rosecliff Acquisition  RMG Acquisition

Pay attention - limited upside

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

Pair Corralation between Rosecliff Acquisition and RMG Acquisition

If you would invest (100.00) in RMG Acquisition Corp on December 28, 2024 and sell it today you would earn a total of  100.00  from holding RMG Acquisition Corp 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

Rosecliff Acquisition Corp  vs.  RMG Acquisition Corp

Rosecliff Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rosecliff Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Rosecliff Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

RMG Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days RMG Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RMG Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Rosecliff Acquisition and RMG Acquisition

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

The idea behind Rosecliff Acquisition Corp and RMG 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.