Correlation Between Dune Acquisition and Data Knights
Can any of the company-specific risk be diversified away by investing in both Dune Acquisition and Data Knights 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 Dune Acquisition and Data Knights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dune Acquisition and Data Knights Acquisition, you can compare the effects of market volatilities on Dune Acquisition and Data Knights 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 Dune Acquisition with a short position of Data Knights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dune Acquisition and Data Knights.
Diversification Opportunities for Dune Acquisition and Data Knights
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dune and Data is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dune Acquisition and Data Knights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Knights Acquisition and Dune Acquisition 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 Dune Acquisition are associated (or correlated) with Data Knights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Knights Acquisition has no effect on the direction of Dune Acquisition i.e., Dune Acquisition and Data Knights go up and down completely randomly.
Pair Corralation between Dune Acquisition and Data Knights
Assuming the 90 days horizon Dune Acquisition is expected to generate 122.89 times more return on investment than Data Knights. However, Dune Acquisition is 122.89 times more volatile than Data Knights Acquisition. It trades about 0.17 of its potential returns per unit of risk. Data Knights Acquisition is currently generating about 0.12 per unit of risk. If you would invest 1.50 in Dune Acquisition on August 30, 2024 and sell it today you would earn a total of 5.50 from holding Dune Acquisition or generate 366.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 57.42% |
| Values | Daily Returns |
Dune Acquisition vs. Data Knights Acquisition
Performance |
| Timeline |
| Dune Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Data Knights Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dune Acquisition and Data Knights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dune Acquisition and Data Knights
The main advantage of trading using opposite Dune Acquisition and Data Knights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dune Acquisition position performs unexpectedly, Data Knights 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 Data Knights will offset losses from the drop in Data Knights' long position.The idea behind Dune Acquisition and Data Knights 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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