Correlation Between Spotify Technology and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Spotify Technology and Alfa Financial 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 Spotify Technology and Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and Alfa Financial Software, you can compare the effects of market volatilities on Spotify Technology and Alfa Financial 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 Spotify Technology with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Alfa Financial.
Diversification Opportunities for Spotify Technology and Alfa Financial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spotify and Alfa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software and Spotify Technology 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 Spotify Technology SA are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Spotify Technology i.e., Spotify Technology and Alfa Financial go up and down completely randomly.
Pair Corralation between Spotify Technology and Alfa Financial
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.21 times more return on investment than Alfa Financial. However, Spotify Technology is 1.21 times more volatile than Alfa Financial Software. It trades about 0.42 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.04 per unit of risk. If you would invest 35,465 in Spotify Technology SA on August 28, 2024 and sell it today you would earn a total of 10,590 from holding Spotify Technology SA or generate 29.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Alfa Financial Software
Performance |
| Timeline |
| Spotify Technology |
| Alfa Financial Software |
Spotify Technology and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Alfa Financial
The main advantage of trading using opposite Spotify Technology and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| Spotify Technology vs. Samsung Electronics Co | Spotify Technology vs. Samsung Electronics Co | Spotify Technology vs. Hyundai Motor | Spotify Technology vs. Toyota Motor Corp |
| Alfa Financial vs. Uniper SE | Alfa Financial vs. London Security Plc | Alfa Financial vs. SURETRACK MON | Alfa Financial vs. Ikigai Ventures |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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