Correlation Between East Resources and Dune Acquisition

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

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

Diversification Opportunities for East Resources and Dune Acquisition

0.0

Correlation Coefficient

East Resources  Dune Acquisition

Pay attention - limited upside

The 3 months correlation between East and Dune is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding East Resources Acquisition and Dune Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dune Acquisition and East Resources 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 East Resources Acquisition are associated (or correlated) with Dune Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dune Acquisition has no effect on the direction of East Resources i.e., East Resources and Dune Acquisition go up and down completely randomly.

Pair Corralation between East Resources and Dune Acquisition

If you would invest  7.00  in Dune Acquisition on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Dune Acquisition or generate 0.0% return on investment over 90 days.

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

East Resources Acquisition  vs.  Dune Acquisition

East Resources Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Resources Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, East Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Dune Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dune Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Dune Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with East Resources and Dune Acquisition

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

The idea behind East Resources Acquisition and Dune 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.