Correlation Between Alignvest Acquisition and Dexterra

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

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

Diversification Opportunities for Alignvest Acquisition and Dexterra

0.17

Correlation Coefficient

Alignvest Acquisition  Dexterra

Average diversification

The 3 months correlation between Alignvest and Dexterra is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alignvest Acquisition II and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group and Alignvest 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 Alignvest Acquisition II are associated (or correlated) with Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Alignvest Acquisition i.e., Alignvest Acquisition and Dexterra go up and down completely randomly.

Pair Corralation between Alignvest Acquisition and Dexterra

Assuming the 90 days trading horizon Alignvest Acquisition II is expected to generate 1.75 times more return on investment than Dexterra. However, Alignvest Acquisition is 1.75 times more volatile than Dexterra Group. It trades about 0.14 of its potential returns per unit of risk. Dexterra Group is currently generating about 0.0 per unit of risk. If you would invest  625.00  in Alignvest Acquisition II on December 25, 2024 and sell it today you would earn a total of  138.00  from holding Alignvest Acquisition II or generate 22.08% return on investment over 90 days.

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

Alignvest Acquisition II  vs.  Dexterra Group

Alignvest Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alignvest Acquisition II are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Alignvest Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Dexterra Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dexterra Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dexterra is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alignvest Acquisition and Dexterra

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

The idea behind Alignvest Acquisition II and Dexterra Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.