Correlation Between Finnovate Acquisition and Patria Investments

Can any of the company-specific risk be diversified away by investing in both Finnovate Acquisition and Patria Investments 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 Finnovate Acquisition and Patria Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Finnovate Acquisition Corp and Patria Investments, you can compare the effects of market volatilities on Finnovate Acquisition and Patria Investments 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 Finnovate Acquisition with a short position of Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnovate Acquisition and Patria Investments.

Diversification Opportunities for Finnovate Acquisition and Patria Investments

-0.72

Correlation Coefficient

Finnovate Acquisition  Patria Investments

Pay attention - limited upside

The 3 months correlation between Finnovate and Patria is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Finnovate Acquisition Corp and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments and Finnovate 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 Finnovate Acquisition Corp are associated (or correlated) with Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Finnovate Acquisition i.e., Finnovate Acquisition and Patria Investments go up and down completely randomly.

Pair Corralation between Finnovate Acquisition and Patria Investments

Given the investment horizon of 90 days Finnovate Acquisition is expected to generate 2.53 times less return on investment than Patria Investments. But when comparing it to its historical volatility, Finnovate Acquisition Corp is 11.71 times less risky than Patria Investments. It trades about 0.14 of its potential returns per unit of risk. Patria Investments is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,116  in Patria Investments on July 18, 2024 and sell it today you would earn a total of  8.00  from holding Patria Investments or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Finnovate Acquisition Corp  vs.  Patria Investments

Finnovate Acquisition

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Finnovate Acquisition Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Finnovate Acquisition is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Patria Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Patria Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Finnovate Acquisition and Patria Investments

The main advantage of trading using opposite Finnovate Acquisition and Patria Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnovate Acquisition position performs unexpectedly, Patria Investments 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 Patria Investments will offset losses from the drop in Patria Investments' long position.

The idea behind Finnovate Acquisition Corp and Patria Investments 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..