Correlation Between DMY Squared and PowerUp Acquisition

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Can any of the company-specific risk be diversified away by investing in both DMY Squared and PowerUp 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 PowerUp 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 PowerUp Acquisition Corp, you can compare the effects of market volatilities on DMY Squared and PowerUp 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 PowerUp Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMY Squared and PowerUp Acquisition.

Diversification Opportunities for DMY Squared and PowerUp Acquisition

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between DMY and PowerUp is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology and PowerUp Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerUp 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 PowerUp Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerUp Acquisition Corp has no effect on the direction of DMY Squared i.e., DMY Squared and PowerUp Acquisition go up and down completely randomly.

Pair Corralation between DMY Squared and PowerUp Acquisition

Given the investment horizon of 90 days dMY Squared Technology is expected to generate 0.29 times more return on investment than PowerUp Acquisition. However, dMY Squared Technology is 3.5 times less risky than PowerUp Acquisition. It trades about 0.07 of its potential returns per unit of risk. PowerUp Acquisition Corp is currently generating about -0.17 per unit of risk. If you would invest  1,060  in dMY Squared Technology on August 30, 2024 and sell it today you would earn a total of  5.00  from holding dMY Squared Technology or generate 0.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

dMY Squared Technology  vs.  PowerUp Acquisition Corp

 Performance 
       Timeline  
dMY Squared Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days dMY Squared Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
PowerUp Acquisition Corp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PowerUp Acquisition Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PowerUp Acquisition is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

DMY Squared and PowerUp Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DMY Squared and PowerUp Acquisition

The main advantage of trading using opposite DMY Squared and PowerUp Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared position performs unexpectedly, PowerUp 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 PowerUp Acquisition will offset losses from the drop in PowerUp Acquisition's long position.
The idea behind dMY Squared Technology and PowerUp 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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