Correlation Between Newcourt Acquisition and LatAmGrowth SPAC

Can any of the company-specific risk be diversified away by investing in both Newcourt 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 Newcourt 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 Newcourt Acquisition Corp and LatAmGrowth SPAC, you can compare the effects of market volatilities on Newcourt 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 Newcourt Acquisition with a short position of LatAmGrowth SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcourt Acquisition and LatAmGrowth SPAC.

Diversification Opportunities for Newcourt Acquisition and LatAmGrowth SPAC

0.35

Correlation Coefficient

Newcourt Acquisition  LatAmGrowth SPAC

Weak diversification

The 3 months correlation between Newcourt and LatAmGrowth is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Newcourt Acquisition Corp and LatAmGrowth SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LatAmGrowth SPAC and Newcourt 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 Newcourt 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 has no effect on the direction of Newcourt Acquisition i.e., Newcourt Acquisition and LatAmGrowth SPAC go up and down completely randomly.

Pair Corralation between Newcourt Acquisition and LatAmGrowth SPAC

Given the investment horizon of 90 days Newcourt Acquisition Corp is expected to generate 0.17 times more return on investment than LatAmGrowth SPAC. However, Newcourt Acquisition Corp is 5.87 times less risky than LatAmGrowth SPAC. It trades about 0.19 of its potential returns per unit of risk. LatAmGrowth SPAC is currently generating about 0.0 per unit of risk. 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

Newcourt Acquisition Corp  vs.  LatAmGrowth SPAC

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.

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.

Pair Trading with Newcourt Acquisition and LatAmGrowth SPAC

The main advantage of trading using opposite Newcourt Acquisition and LatAmGrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newcourt 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 Newcourt Acquisition Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.