Correlation Between Springwater Special and Corner Growth

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

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

Diversification Opportunities for Springwater Special and Corner Growth

0.65

Correlation Coefficient

Springwater Special  Corner Growth

Poor diversification

The 3 months correlation between Springwater and Corner is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Springwater Special Situations and Corner Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corner Growth Acquisition and Springwater Special 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 Springwater Special Situations are associated (or correlated) with Corner Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corner Growth Acquisition has no effect on the direction of Springwater Special i.e., Springwater Special and Corner Growth go up and down completely randomly.

Pair Corralation between Springwater Special and Corner Growth

Assuming the 90 days horizon Springwater Special is expected to generate 2.11 times less return on investment than Corner Growth. But when comparing it to its historical volatility, Springwater Special Situations is 2.7 times less risky than Corner Growth. It trades about 0.14 of its potential returns per unit of risk. Corner Growth Acquisition is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Corner Growth Acquisition on September 18, 2024 and sell it today you would lose (1.00) from holding Corner Growth Acquisition or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	33.58%
Values	Daily Returns

Springwater Special Situations  vs.  Corner Growth Acquisition

Springwater Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Springwater Special Situations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Springwater Special is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Corner Growth Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corner Growth Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Corner Growth is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Springwater Special and Corner Growth

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

The idea behind Springwater Special Situations and Corner Growth 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..