Correlation Between Stifel Financial and AlphaTime Acquisition

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

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

Diversification Opportunities for Stifel Financial and AlphaTime Acquisition

0.63

Correlation Coefficient

Stifel Financial  AlphaTime Acquisition

Poor diversification

The 3 months correlation between Stifel and AlphaTime is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and AlphaTime Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlphaTime Acquisition and Stifel Financial 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 Stifel Financial are associated (or correlated) with AlphaTime Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlphaTime Acquisition has no effect on the direction of Stifel Financial i.e., Stifel Financial and AlphaTime Acquisition go up and down completely randomly.

Pair Corralation between Stifel Financial and AlphaTime Acquisition

Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 2.04 times less return on investment than AlphaTime Acquisition. But when comparing it to its historical volatility, Stifel Financial is 5.27 times less risky than AlphaTime Acquisition. It trades about 0.21 of its potential returns per unit of risk. AlphaTime Acquisition Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  13.00  in AlphaTime Acquisition Corp on September 13, 2024 and sell it today you would earn a total of  1.54  from holding AlphaTime Acquisition Corp or generate 11.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	54.69%
Values	Daily Returns

Stifel Financial  vs.  AlphaTime Acquisition Corp

Stifel Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Stifel Financial reported solid returns over the last few months and may actually be approaching a breakup point.

AlphaTime Acquisition

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days AlphaTime Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak fundamental indicators, AlphaTime Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stifel Financial and AlphaTime Acquisition

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

The idea behind Stifel Financial and AlphaTime 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 Stocks Directory module to find actively traded stocks across global markets.