Correlation Between Corner Growth and Dune Acquisition
Can any of the company-specific risk be diversified away by investing in both Corner Growth and Dune 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 Corner Growth and Dune Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corner Growth Acquisition and Dune Acquisition, you can compare the effects of market volatilities on Corner Growth and Dune 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 Corner Growth with a short position of Dune Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corner Growth and Dune Acquisition.
Diversification Opportunities for Corner Growth and Dune Acquisition
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Corner and Dune is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Corner Growth Acquisition and Dune Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dune Acquisition and Corner Growth 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 Corner Growth Acquisition are associated (or correlated) with Dune Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dune Acquisition has no effect on the direction of Corner Growth i.e., Corner Growth and Dune Acquisition go up and down completely randomly.
Pair Corralation between Corner Growth and Dune Acquisition
Assuming the 90 days horizon Corner Growth is expected to generate 3.09 times less return on investment than Dune Acquisition. But when comparing it to its historical volatility, Corner Growth Acquisition is 1.72 times less risky than Dune Acquisition. It trades about 0.1 of its potential returns per unit of risk. Dune Acquisition is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1.51 in Dune Acquisition on September 3, 2024 and sell it today you would earn a total of 5.49 from holding Dune Acquisition or generate 363.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.86% |
| Values | Daily Returns |
Corner Growth Acquisition vs. Dune Acquisition
Performance |
| Timeline |
| Corner Growth Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dune Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Corner Growth and Dune Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corner Growth and Dune Acquisition
The main advantage of trading using opposite Corner Growth and Dune Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corner Growth position performs unexpectedly, Dune 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 Dune Acquisition will offset losses from the drop in Dune Acquisition's long position.The idea behind Corner Growth Acquisition and Dune 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.Check out your portfolio center.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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