Correlation Between Cartesian Growth and Mountain Lake

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

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

Diversification Opportunities for Cartesian Growth and Mountain Lake

-0.61

Correlation Coefficient

Cartesian Growth  Mountain Lake

Excellent diversification

The 3 months correlation between Cartesian and Mountain is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cartesian Growth and Mountain Lake Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Lake Acquisition and Cartesian Growth 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 Cartesian Growth are associated (or correlated) with Mountain Lake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Lake Acquisition has no effect on the direction of Cartesian Growth i.e., Cartesian Growth and Mountain Lake go up and down completely randomly.

Pair Corralation between Cartesian Growth and Mountain Lake

Assuming the 90 days horizon Cartesian Growth is expected to generate 2.6 times less return on investment than Mountain Lake. In addition to that, Cartesian Growth is 1.38 times more volatile than Mountain Lake Acquisition. It trades about 0.08 of its total potential returns per unit of risk. Mountain Lake Acquisition is currently generating about 0.3 per unit of volatility. If you would invest  995.00  in Mountain Lake Acquisition on December 25, 2024 and sell it today you would earn a total of  8.00  from holding Mountain Lake Acquisition or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	59.32%
Values	Daily Returns

Cartesian Growth  vs.  Mountain Lake Acquisition

Cartesian Growth

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cartesian Growth are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Cartesian Growth is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Mountain Lake Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain Lake Acquisition are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Mountain Lake is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cartesian Growth and Mountain Lake

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

The idea behind Cartesian Growth and Mountain Lake 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.