Correlation Between DMY Squared and Global Lights
Can any of the company-specific risk be diversified away by investing in both DMY Squared and Global Lights 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 Global Lights 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 Global Lights Acquisition, you can compare the effects of market volatilities on DMY Squared and Global Lights 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 Global Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMY Squared and Global Lights.
Diversification Opportunities for DMY Squared and Global Lights
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between DMY and Global is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology and Global Lights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Lights Acquisition 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 Global Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Lights Acquisition has no effect on the direction of DMY Squared i.e., DMY Squared and Global Lights go up and down completely randomly.
Pair Corralation between DMY Squared and Global Lights
If you would invest 1,067 in dMY Squared Technology on October 25, 2024 and sell it today you would earn a total of 3.00 from holding dMY Squared Technology or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 10.53% |
| Values | Daily Returns |
dMY Squared Technology vs. Global Lights Acquisition
Performance |
| Timeline |
| dMY Squared Technology |
| Global Lights Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
DMY Squared and Global Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DMY Squared and Global Lights
The main advantage of trading using opposite DMY Squared and Global Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared position performs unexpectedly, Global Lights 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 Global Lights will offset losses from the drop in Global Lights' long position.The idea behind dMY Squared Technology and Global Lights 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.| Global Lights vs. Albertsons Companies | Global Lights vs. MYT Netherlands Parent | Global Lights vs. Asbury Automotive Group | Global Lights vs. Tradeshow Marketing |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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