Correlation Between DMY Squared and ESH Acquisition
Can any of the company-specific risk be diversified away by investing in both DMY Squared and ESH 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 DMY Squared and ESH Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between dMY Squared Technology and ESH Acquisition Corp, you can compare the effects of market volatilities on DMY Squared and ESH 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 DMY Squared with a short position of ESH Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMY Squared and ESH Acquisition.
Diversification Opportunities for DMY Squared and ESH Acquisition
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DMY and ESH is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology and ESH Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESH Acquisition Corp and DMY Squared 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 dMY Squared Technology are associated (or correlated) with ESH Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESH Acquisition Corp has no effect on the direction of DMY Squared i.e., DMY Squared and ESH Acquisition go up and down completely randomly.
Pair Corralation between DMY Squared and ESH Acquisition
Given the investment horizon of 90 days DMY Squared is expected to generate 8345.22 times less return on investment than ESH Acquisition. But when comparing it to its historical volatility, dMY Squared Technology is 505.97 times less risky than ESH Acquisition. It trades about 0.01 of its potential returns per unit of risk. ESH Acquisition Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 15.00 in ESH Acquisition Corp on November 3, 2024 and sell it today you would lose (6.00) from holding ESH Acquisition Corp or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.9% |
| Values | Daily Returns |
dMY Squared Technology vs. ESH Acquisition Corp
Performance |
| Timeline |
| dMY Squared Technology |
| ESH Acquisition Corp |
DMY Squared and ESH Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DMY Squared and ESH Acquisition
The main advantage of trading using opposite DMY Squared and ESH Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared position performs unexpectedly, ESH 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 ESH Acquisition will offset losses from the drop in ESH Acquisition's long position.The idea behind dMY Squared Technology and ESH 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.| ESH Acquisition vs. Toronto Dominion Bank | ESH Acquisition vs. Gladstone Investment | ESH Acquisition vs. Guangdong Investment Limited | ESH Acquisition vs. NorthWestern |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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