Correlation Between AA Mission and DMY Squared

Can any of the company-specific risk be diversified away by investing in both AA Mission and DMY Squared 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 AA Mission and DMY Squared into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AA Mission Acquisition and dMY Squared Technology, you can compare the effects of market volatilities on AA Mission and DMY Squared 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 AA Mission with a short position of DMY Squared. Check out your portfolio center. Please also check ongoing floating volatility patterns of AA Mission and DMY Squared.

Diversification Opportunities for AA Mission and DMY Squared

0.27

Correlation Coefficient

AA Mission  DMY Squared

Modest diversification

The 3 months correlation between AAM and DMY is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AA Mission Acquisition and dMY Squared Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dMY Squared Technology and AA Mission 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 AA Mission Acquisition are associated (or correlated) with DMY Squared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dMY Squared Technology has no effect on the direction of AA Mission i.e., AA Mission and DMY Squared go up and down completely randomly.

Pair Corralation between AA Mission and DMY Squared

Considering the 90-day investment horizon AA Mission Acquisition is expected to generate 0.25 times more return on investment than DMY Squared. However, AA Mission Acquisition is 4.04 times less risky than DMY Squared. It trades about 0.16 of its potential returns per unit of risk. dMY Squared Technology is currently generating about 0.01 per unit of risk. If you would invest  999.00  in AA Mission Acquisition on September 22, 2024 and sell it today you would earn a total of  9.00  from holding AA Mission Acquisition or generate 0.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AA Mission Acquisition  vs.  dMY Squared Technology

AA Mission Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AA Mission Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AA Mission is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

dMY Squared Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in dMY Squared Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AA Mission and DMY Squared

The main advantage of trading using opposite AA Mission and DMY Squared positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AA Mission position performs unexpectedly, DMY Squared 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 DMY Squared will offset losses from the drop in DMY Squared's long position.

The idea behind AA Mission Acquisition and dMY Squared Technology 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.