Correlation Between LatAmGrowth SPAC and Mountain

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

By analyzing existing cross correlation between LatAmGrowth SPAC Warrants and Mountain Co I, you can compare the effects of market volatilities on LatAmGrowth SPAC and Mountain 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 Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of LatAmGrowth SPAC and Mountain.

Diversification Opportunities for LatAmGrowth SPAC and Mountain

0.68

Correlation Coefficient

LatAmGrowth SPAC  Mountain

Poor diversification

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

Pair Corralation between LatAmGrowth SPAC and Mountain

If you would invest  1.24  in Mountain Co I on September 15, 2024 and sell it today you would lose (0.20) from holding Mountain Co I or give up 16.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	7.69%
Values	Daily Returns

LatAmGrowth SPAC Warrants  vs.  Mountain Co I

LatAmGrowth SPAC Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mountain Co I

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with LatAmGrowth SPAC and Mountain

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

The idea behind LatAmGrowth SPAC Warrants and Mountain Co I 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.