Correlation Between NYSE Composite and Latamgrowth SPAC

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

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

Diversification Opportunities for NYSE Composite and Latamgrowth SPAC

-0.4

Correlation Coefficient

NYSE Composite  Latamgrowth SPAC

Very good diversification

The 3 months correlation between NYSE and Latamgrowth is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Latamgrowth SPAC Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latamgrowth SPAC Unit and NYSE Composite 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 NYSE Composite 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 Unit has no effect on the direction of NYSE Composite i.e., NYSE Composite and Latamgrowth SPAC go up and down completely randomly.

Pair Corralation between NYSE Composite and Latamgrowth SPAC

Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.39 times less return on investment than Latamgrowth SPAC. But when comparing it to its historical volatility, NYSE Composite is 3.0 times less risky than Latamgrowth SPAC. It trades about 0.06 of its potential returns per unit of risk. Latamgrowth SPAC Unit is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,029  in Latamgrowth SPAC Unit on October 7, 2024 and sell it today you would earn a total of  191.00  from holding Latamgrowth SPAC Unit or generate 18.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NYSE Composite  vs.  Latamgrowth SPAC Unit

Pair Trading with NYSE Composite and Latamgrowth SPAC

The main advantage of trading using opposite NYSE Composite and Latamgrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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 NYSE Composite and Latamgrowth SPAC Unit 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..