Correlation Between Software Acquisition and Arhaus

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

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

Diversification Opportunities for Software Acquisition and Arhaus

-0.06

Correlation Coefficient

Software Acquisition  Arhaus

Good diversification

The 3 months correlation between Software and Arhaus is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Software 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 Software Acquisition Group are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Software Acquisition i.e., Software Acquisition and Arhaus go up and down completely randomly.

Pair Corralation between Software Acquisition and Arhaus

Given the investment horizon of 90 days Software Acquisition Group is expected to under-perform the Arhaus. In addition to that, Software Acquisition is 1.08 times more volatile than Arhaus Inc. It trades about -0.27 of its total potential returns per unit of risk. Arhaus Inc is currently generating about -0.2 per unit of volatility. If you would invest  1,102  in Arhaus Inc on October 10, 2024 and sell it today you would lose (156.00) from holding Arhaus Inc or give up 14.16% of portfolio value over 90 days.

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

Software Acquisition Group  vs.  Arhaus Inc

Software Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Software Acquisition Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Software Acquisition and Arhaus

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

The idea behind Software Acquisition Group and Arhaus Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.