Correlation Between DMY Squared and IX Acquisition

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

Diversification Opportunities for DMY Squared and IX Acquisition

-0.48

Correlation Coefficient

DMY Squared  IX Acquisition

Very good diversification

The 3 months correlation between DMY and IXAQ is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology and IX Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IX 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 IX Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IX Acquisition Corp has no effect on the direction of DMY Squared i.e., DMY Squared and IX Acquisition go up and down completely randomly.

Pair Corralation between DMY Squared and IX Acquisition

Given the investment horizon of 90 days dMY Squared Technology is expected to under-perform the IX Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, dMY Squared Technology is 1.38 times less risky than IX Acquisition. The stock trades about -0.01 of its potential returns per unit of risk. The IX Acquisition Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,141  in IX Acquisition Corp on September 30, 2024 and sell it today you would earn a total of  14.00  from holding IX Acquisition Corp or generate 1.23% return on investment over 90 days.

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

dMY Squared Technology  vs.  IX Acquisition Corp

dMY Squared Technology

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

IX Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IX Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IX Acquisition is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DMY Squared and IX Acquisition

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

The idea behind dMY Squared Technology and IX 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.