Correlation Between LatAmGrowth SPAC and Newcourt Acquisition

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

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

Diversification Opportunities for LatAmGrowth SPAC and Newcourt Acquisition

0.35

Correlation Coefficient

LatAmGrowth SPAC  Newcourt Acquisition

Weak diversification

The 3 months correlation between LatAmGrowth and Newcourt is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LatAmGrowth SPAC and Newcourt Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcourt Acquisition Corp 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 Newcourt Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcourt Acquisition Corp has no effect on the direction of LatAmGrowth SPAC i.e., LatAmGrowth SPAC and Newcourt Acquisition go up and down completely randomly.

Pair Corralation between LatAmGrowth SPAC and Newcourt Acquisition

Given the investment horizon of 90 days LatAmGrowth SPAC is expected to generate 41.91 times less return on investment than Newcourt Acquisition. In addition to that, LatAmGrowth SPAC is 5.87 times more volatile than Newcourt Acquisition Corp. It trades about 0.0 of its total potential returns per unit of risk. Newcourt Acquisition Corp is currently generating about 0.19 per unit of volatility. If you would invest  1,036  in Newcourt Acquisition Corp on October 4, 2024 and sell it today you would earn a total of  64.00  from holding Newcourt Acquisition Corp or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	26.41%
Values	Daily Returns

LatAmGrowth SPAC  vs.  Newcourt Acquisition Corp

LatAmGrowth SPAC

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Newcourt Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcourt Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Newcourt Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LatAmGrowth SPAC and Newcourt Acquisition

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

The idea behind LatAmGrowth SPAC and Newcourt Acquisition Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.