Correlation Between Azul SA and Insight Acquisition

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

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

Diversification Opportunities for Azul SA and Insight Acquisition

0.16

Correlation Coefficient

Azul SA  Insight Acquisition

Average diversification

The 3 months correlation between Azul and Insight is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and Insight Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insight Acquisition Corp and Azul SA 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 Azul SA are associated (or correlated) with Insight Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insight Acquisition Corp has no effect on the direction of Azul SA i.e., Azul SA and Insight Acquisition go up and down completely randomly.

Pair Corralation between Azul SA and Insight Acquisition

Given the investment horizon of 90 days Azul SA is expected to under-perform the Insight Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Azul SA is 10.02 times less risky than Insight Acquisition. The stock trades about -0.23 of its potential returns per unit of risk. The Insight Acquisition Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Insight Acquisition Corp on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Insight Acquisition Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.94%
Values	Daily Returns

Azul SA  vs.  Insight Acquisition Corp

Azul SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Azul SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Insight Acquisition Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Insight Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating basic indicators, Insight Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azul SA and Insight Acquisition

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

The idea behind Azul SA and Insight 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.