Correlation Between Main Street and LatAmGrowth SPAC
Can any of the company-specific risk be diversified away by investing in both Main Street 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 Main Street and LatAmGrowth SPAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and LatAmGrowth SPAC, you can compare the effects of market volatilities on Main Street 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 Main Street with a short position of LatAmGrowth SPAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and LatAmGrowth SPAC.
Diversification Opportunities for Main Street and LatAmGrowth SPAC
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Main and LatAmGrowth is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and LatAmGrowth SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LatAmGrowth SPAC and Main Street 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 Main Street Capital 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 Main Street i.e., Main Street and LatAmGrowth SPAC go up and down completely randomly.
Pair Corralation between Main Street and LatAmGrowth SPAC
Given the investment horizon of 90 days Main Street Capital is expected to generate 8.67 times more return on investment than LatAmGrowth SPAC. However, Main Street is 8.67 times more volatile than LatAmGrowth SPAC. It trades about 0.15 of its potential returns per unit of risk. LatAmGrowth SPAC is currently generating about 0.21 per unit of risk. If you would invest 4,267 in Main Street Capital on September 1, 2024 and sell it today you would earn a total of 1,280 from holding Main Street Capital or generate 30.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. LatAmGrowth SPAC
Performance |
| Timeline |
| Main Street Capital |
| LatAmGrowth SPAC |
Main Street and LatAmGrowth SPAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and LatAmGrowth SPAC
The main advantage of trading using opposite Main Street and LatAmGrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street 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.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| LatAmGrowth SPAC vs. Portage Fintech Acquisition | LatAmGrowth SPAC vs. Swiftmerge Acquisition Corp | LatAmGrowth SPAC vs. Four Leaf Acquisition | LatAmGrowth SPAC vs. IX Acquisition Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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