Correlation Between Dune Acquisition and CF Acquisition

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

By analyzing existing cross correlation between Dune Acquisition Corp and CF Acquisition Corp, you can compare the effects of market volatilities on Dune Acquisition and CF 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 Dune Acquisition with a short position of CF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dune Acquisition and CF Acquisition.

Diversification Opportunities for Dune Acquisition and CF Acquisition

0.15

Correlation Coefficient

Dune Acquisition  CF Acquisition

Average diversification

The 3 months correlation between Dune and CFIVU is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dune Acquisition Corp and CF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition Corp 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 Corp are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition Corp has no effect on the direction of Dune Acquisition i.e., Dune Acquisition and CF Acquisition go up and down completely randomly.

Pair Corralation between Dune Acquisition and CF Acquisition

Assuming the 90 days horizon Dune Acquisition Corp is expected to generate 0.07 times more return on investment than CF Acquisition. However, Dune Acquisition Corp is 14.13 times less risky than CF Acquisition. It trades about 0.1 of its potential returns per unit of risk. CF Acquisition Corp is currently generating about 0.0 per unit of risk. If you would invest  996.00  in Dune Acquisition Corp on September 14, 2024 and sell it today you would earn a total of  3.00  from holding Dune Acquisition Corp or generate 0.3% return on investment over 90 days.

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

Dune Acquisition Corp  vs.  CF Acquisition Corp

Dune Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dune Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Dune Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CF Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CF Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CF Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dune Acquisition and CF Acquisition

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

The idea behind Dune Acquisition Corp and CF 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.