Correlation Between Oxbridge Acquisition and LatAmGrowth SPAC

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

Diversification Opportunities for Oxbridge Acquisition and LatAmGrowth SPAC

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Oxbridge and LatAmGrowth is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Oxbridge 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 Oxbridge 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 Oxbridge 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 Oxbridge Acquisition i.e., Oxbridge Acquisition and LatAmGrowth SPAC go up and down completely randomly.

Pair Corralation between Oxbridge Acquisition and LatAmGrowth SPAC

If you would invest  1,166  in LatAmGrowth SPAC on September 12, 2024 and sell it today you would earn a total of  8.00  from holding LatAmGrowth SPAC or generate 0.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy4.55%
ValuesDaily Returns

Oxbridge Acquisition Corp  vs.  LatAmGrowth SPAC

 Performance 
       Timeline  
Oxbridge Acquisition Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Oxbridge Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Oxbridge 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

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in LatAmGrowth SPAC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, LatAmGrowth SPAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Oxbridge Acquisition and LatAmGrowth SPAC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oxbridge Acquisition and LatAmGrowth SPAC

The main advantage of trading using opposite Oxbridge Acquisition and LatAmGrowth SPAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oxbridge 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 Oxbridge 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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