Correlation Between LatAmGrowth SPAC and Finnovate Acquisition
Can any of the company-specific risk be diversified away by investing in both LatAmGrowth SPAC and Finnovate 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 Finnovate 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 Finnovate Acquisition Corp, you can compare the effects of market volatilities on LatAmGrowth SPAC and Finnovate 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 Finnovate Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of LatAmGrowth SPAC and Finnovate Acquisition.
Diversification Opportunities for LatAmGrowth SPAC and Finnovate Acquisition
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LatAmGrowth and Finnovate is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LatAmGrowth SPAC and Finnovate Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnovate Acquisition 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 Finnovate Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnovate Acquisition has no effect on the direction of LatAmGrowth SPAC i.e., LatAmGrowth SPAC and Finnovate Acquisition go up and down completely randomly.
Pair Corralation between LatAmGrowth SPAC and Finnovate Acquisition
Given the investment horizon of 90 days LatAmGrowth SPAC is expected to generate 3.04 times less return on investment than Finnovate Acquisition. But when comparing it to its historical volatility, LatAmGrowth SPAC is 7.71 times less risky than Finnovate Acquisition. It trades about 0.31 of its potential returns per unit of risk. Finnovate Acquisition Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,156 in Finnovate Acquisition Corp on August 29, 2024 and sell it today you would earn a total of 6.00 from holding Finnovate Acquisition Corp or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LatAmGrowth SPAC vs. Finnovate Acquisition Corp
Performance |
| Timeline |
| LatAmGrowth SPAC |
| Finnovate Acquisition |
LatAmGrowth SPAC and Finnovate Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LatAmGrowth SPAC and Finnovate Acquisition
The main advantage of trading using opposite LatAmGrowth SPAC and Finnovate Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LatAmGrowth SPAC position performs unexpectedly, Finnovate 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 Finnovate Acquisition will offset losses from the drop in Finnovate Acquisition's long position.| LatAmGrowth SPAC vs. Portage Fintech Acquisition | LatAmGrowth SPAC vs. Swiftmerge Acquisition Corp | LatAmGrowth SPAC vs. Four Leaf Acquisition | LatAmGrowth SPAC vs. IX Acquisition Corp |
| Finnovate Acquisition vs. Broad Capital Acquisition | Finnovate Acquisition vs. Welsbach Technology Metals |
Check out your portfolio center.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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