Correlation Between Broad Capital and LatAmGrowth SPAC

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

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

Diversification Opportunities for Broad Capital and LatAmGrowth SPAC

-0.68

Correlation Coefficient

Broad Capital  LatAmGrowth SPAC

Excellent diversification

The 3 months correlation between Broad and LatAmGrowth is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and LatAmGrowth SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LatAmGrowth SPAC and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with LatAmGrowth SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LatAmGrowth SPAC has no effect on the direction of Broad Capital i.e., Broad Capital and LatAmGrowth SPAC go up and down completely randomly.

Pair Corralation between Broad Capital and LatAmGrowth SPAC

Assuming the 90 days horizon Broad Capital Acquisition is expected to under-perform the LatAmGrowth SPAC. In addition to that, Broad Capital is 11.75 times more volatile than LatAmGrowth SPAC. It trades about -0.13 of its total potential returns per unit of risk. LatAmGrowth SPAC is currently generating about 0.29 per unit of volatility. If you would invest  1,151  in LatAmGrowth SPAC on September 2, 2024 and sell it today you would earn a total of  17.00  from holding LatAmGrowth SPAC or generate 1.48% return on investment over 90 days.

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

Broad Capital Acquisition  vs.  LatAmGrowth SPAC

Broad Capital Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broad Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

LatAmGrowth SPAC

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LatAmGrowth SPAC are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, LatAmGrowth SPAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Broad Capital and LatAmGrowth SPAC

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

The idea behind Broad Capital Acquisition and LatAmGrowth SPAC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.