Correlation Between Latamgrowth SPAC and EastGroup Properties

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

By analyzing existing cross correlation between Latamgrowth SPAC Unit and EastGroup Properties, you can compare the effects of market volatilities on Latamgrowth SPAC and EastGroup Properties 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 EastGroup Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latamgrowth SPAC and EastGroup Properties.

Diversification Opportunities for Latamgrowth SPAC and EastGroup Properties

-0.56

Correlation Coefficient

Latamgrowth SPAC  EastGroup Properties

Excellent diversification

The 3 months correlation between Latamgrowth and EastGroup is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Latamgrowth SPAC Unit and EastGroup Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EastGroup Properties 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 Unit are associated (or correlated) with EastGroup Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EastGroup Properties has no effect on the direction of Latamgrowth SPAC i.e., Latamgrowth SPAC and EastGroup Properties go up and down completely randomly.

Pair Corralation between Latamgrowth SPAC and EastGroup Properties

Assuming the 90 days horizon Latamgrowth SPAC Unit is expected to generate 5.16 times more return on investment than EastGroup Properties. However, Latamgrowth SPAC is 5.16 times more volatile than EastGroup Properties. It trades about 0.16 of its potential returns per unit of risk. EastGroup Properties is currently generating about -0.24 per unit of risk. If you would invest  1,177  in Latamgrowth SPAC Unit on October 11, 2024 and sell it today you would earn a total of  224.00  from holding Latamgrowth SPAC Unit or generate 19.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Latamgrowth SPAC Unit  vs.  EastGroup Properties

Latamgrowth SPAC Unit

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Latamgrowth SPAC Unit are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Latamgrowth SPAC unveiled solid returns over the last few months and may actually be approaching a breakup point.

EastGroup Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EastGroup Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Latamgrowth SPAC and EastGroup Properties

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

The idea behind Latamgrowth SPAC Unit and EastGroup Properties 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.