Correlation Between DMY Squared and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both DMY Squared and Plum 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 Plum 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 Plum Acquisition Corp, you can compare the effects of market volatilities on DMY Squared and Plum 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 Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMY Squared and Plum Acquisition.
Diversification Opportunities for DMY Squared and Plum Acquisition
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DMY and Plum is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of DMY Squared i.e., DMY Squared and Plum Acquisition go up and down completely randomly.
Pair Corralation between DMY Squared and Plum Acquisition
Given the investment horizon of 90 days DMY Squared is expected to generate 333.88 times less return on investment than Plum Acquisition. But when comparing it to its historical volatility, dMY Squared Technology is 70.88 times less risky than Plum Acquisition. It trades about 0.12 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.59 of returns per unit of risk over similar time horizon. If you would invest 4.29 in Plum Acquisition Corp on September 13, 2024 and sell it today you would earn a total of 13.51 from holding Plum Acquisition Corp or generate 314.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 54.55% |
| Values | Daily Returns |
dMY Squared Technology vs. Plum Acquisition Corp
Performance |
| Timeline |
| dMY Squared Technology |
| Plum Acquisition Corp |
DMY Squared and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DMY Squared and Plum Acquisition
The main advantage of trading using opposite DMY Squared and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared position performs unexpectedly, Plum 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.| DMY Squared vs. Visa Class A | DMY Squared vs. Diamond Hill Investment | DMY Squared vs. Distoken Acquisition | DMY Squared vs. AllianceBernstein Holding LP |
| Plum Acquisition vs. Acm Research | Plum Acquisition vs. Flexible Solutions International | Plum Acquisition vs. Stepan Company | Plum Acquisition vs. Arrow Electronics |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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