Correlation Between FACT II and Dynamix

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

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

Diversification Opportunities for FACT II and Dynamix

0.58

Correlation Coefficient

FACT II  Dynamix

Very weak diversification

The 3 months correlation between FACT and Dynamix is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FACT II Acquisition and Dynamix Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamix Class and FACT II 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 FACT II Acquisition are associated (or correlated) with Dynamix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamix Class has no effect on the direction of FACT II i.e., FACT II and Dynamix go up and down completely randomly.

Pair Corralation between FACT II and Dynamix

Assuming the 90 days horizon FACT II Acquisition is expected to generate 3.12 times more return on investment than Dynamix. However, FACT II is 3.12 times more volatile than Dynamix Class. It trades about 0.06 of its potential returns per unit of risk. Dynamix Class is currently generating about 0.06 per unit of risk. If you would invest  24.00  in FACT II Acquisition on May 4, 2025 and sell it today you would earn a total of  1.00  from holding FACT II Acquisition or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	62.9%
Values	Daily Returns

FACT II Acquisition  vs.  Dynamix Class

FACT II Acquisition

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, FACT II showed solid returns over the last few months and may actually be approaching a breakup point.

Dynamix Class

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamix Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dynamix may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with FACT II and Dynamix

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

The idea behind FACT II Acquisition and Dynamix Class 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.