Correlation Between RMG Acquisition and Rosecliff Acquisition

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

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

Diversification Opportunities for RMG Acquisition and Rosecliff Acquisition

0.03

Correlation Coefficient

RMG Acquisition  Rosecliff Acquisition

Significant diversification

The 3 months correlation between RMG and Rosecliff is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding RMG Acquisition Corp and Rosecliff Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosecliff Acquisition and RMG 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 RMG Acquisition Corp are associated (or correlated) with Rosecliff Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosecliff Acquisition has no effect on the direction of RMG Acquisition i.e., RMG Acquisition and Rosecliff Acquisition go up and down completely randomly.

Pair Corralation between RMG Acquisition and Rosecliff Acquisition

If you would invest  1,058  in Rosecliff Acquisition Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Rosecliff Acquisition Corp or generate 0.0% return on investment over 90 days.

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

RMG Acquisition Corp  vs.  Rosecliff Acquisition Corp

RMG Acquisition Corp

Risk-Adjusted Performance

0 of 100

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.

Rosecliff Acquisition

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with RMG Acquisition and Rosecliff Acquisition

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

The idea behind RMG Acquisition Corp and Rosecliff 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.