Correlation Between BlackRock and LatAmGrowth SPAC

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

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

Diversification Opportunities for BlackRock and LatAmGrowth SPAC

-0.32

Correlation Coefficient

BlackRock  LatAmGrowth SPAC

Very good diversification

The 3 months correlation between BlackRock and LatAmGrowth is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and LatAmGrowth SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LatAmGrowth SPAC and BlackRock 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 BlackRock 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 BlackRock i.e., BlackRock and LatAmGrowth SPAC go up and down completely randomly.

Pair Corralation between BlackRock and LatAmGrowth SPAC

Considering the 90-day investment horizon BlackRock is expected to generate 0.09 times more return on investment than LatAmGrowth SPAC. However, BlackRock is 11.05 times less risky than LatAmGrowth SPAC. It trades about -0.07 of its potential returns per unit of risk. LatAmGrowth SPAC is currently generating about -0.09 per unit of risk. If you would invest  102,185  in BlackRock on December 30, 2024 and sell it today you would lose (7,515) from holding BlackRock or give up 7.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	20.97%
Values	Daily Returns

BlackRock  vs.  LatAmGrowth SPAC

BlackRock

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

LatAmGrowth SPAC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LatAmGrowth SPAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BlackRock and LatAmGrowth SPAC

The main advantage of trading using opposite BlackRock and LatAmGrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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 BlackRock 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.