Correlation Between ExcelFin Acquisition and LatAmGrowth SPAC

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

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

Diversification Opportunities for ExcelFin Acquisition and LatAmGrowth SPAC

0.18

Correlation Coefficient

ExcelFin Acquisition  LatAmGrowth SPAC

Average diversification

The 3 months correlation between ExcelFin and LatAmGrowth is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ExcelFin Acquisition Corp and LatAmGrowth SPAC Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LatAmGrowth SPAC Warrants and ExcelFin Acquisition 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 ExcelFin Acquisition Corp 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 Warrants has no effect on the direction of ExcelFin Acquisition i.e., ExcelFin Acquisition and LatAmGrowth SPAC go up and down completely randomly.

Pair Corralation between ExcelFin Acquisition and LatAmGrowth SPAC

Assuming the 90 days horizon ExcelFin Acquisition Corp is expected to generate 3.3 times more return on investment than LatAmGrowth SPAC. However, ExcelFin Acquisition is 3.3 times more volatile than LatAmGrowth SPAC Warrants. It trades about 0.13 of its potential returns per unit of risk. LatAmGrowth SPAC Warrants is currently generating about 0.12 per unit of risk. If you would invest  5.00  in ExcelFin Acquisition Corp on September 15, 2024 and sell it today you would earn a total of  2.00  from holding ExcelFin Acquisition Corp or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	37.05%
Values	Daily Returns

ExcelFin Acquisition Corp  vs.  LatAmGrowth SPAC Warrants

ExcelFin Acquisition Corp

Risk-Adjusted Performance

0 of 100

Strong

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

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.

Pair Trading with ExcelFin Acquisition and LatAmGrowth SPAC

The main advantage of trading using opposite ExcelFin Acquisition and LatAmGrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExcelFin Acquisition 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 ExcelFin Acquisition Corp and LatAmGrowth SPAC Warrants 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.