Correlation Between LatAmGrowth SPAC and Four Leaf

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

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

Diversification Opportunities for LatAmGrowth SPAC and Four Leaf

0.6

Correlation Coefficient

LatAmGrowth SPAC  Four Leaf

Poor diversification

The 3 months correlation between LatAmGrowth and Four is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LatAmGrowth SPAC and Four Leaf Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Leaf Acquisition and LatAmGrowth SPAC 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 LatAmGrowth SPAC are associated (or correlated) with Four Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Leaf Acquisition has no effect on the direction of LatAmGrowth SPAC i.e., LatAmGrowth SPAC and Four Leaf go up and down completely randomly.

Pair Corralation between LatAmGrowth SPAC and Four Leaf

Given the investment horizon of 90 days LatAmGrowth SPAC is expected to generate 11.49 times more return on investment than Four Leaf. However, LatAmGrowth SPAC is 11.49 times more volatile than Four Leaf Acquisition. It trades about 0.28 of its potential returns per unit of risk. Four Leaf Acquisition is currently generating about 0.13 per unit of risk. If you would invest  1,150  in LatAmGrowth SPAC on September 16, 2024 and sell it today you would earn a total of  27.00  from holding LatAmGrowth SPAC or generate 2.35% return on investment over 90 days.

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

LatAmGrowth SPAC  vs.  Four Leaf Acquisition

LatAmGrowth SPAC

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LatAmGrowth SPAC are ranked lower than 21 (%) 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Four Leaf Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Leaf Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Four Leaf is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LatAmGrowth SPAC and Four Leaf

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

The idea behind LatAmGrowth SPAC and Four Leaf 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.