Correlation Between Spotify Technology and Sage Group
Can any of the company-specific risk be diversified away by investing in both Spotify Technology and Sage Group 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 Sage Group 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 Sage Group PLC, you can compare the effects of market volatilities on Spotify Technology and Sage Group 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 Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and Sage Group.
Diversification Opportunities for Spotify Technology and Sage Group
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spotify and Sage is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC 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 Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of Spotify Technology i.e., Spotify Technology and Sage Group go up and down completely randomly.
Pair Corralation between Spotify Technology and Sage Group
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 2.77 times more return on investment than Sage Group. However, Spotify Technology is 2.77 times more volatile than Sage Group PLC. It trades about 0.08 of its potential returns per unit of risk. Sage Group PLC is currently generating about 0.11 per unit of risk. If you would invest 45,355 in Spotify Technology SA on October 28, 2024 and sell it today you would earn a total of 2,885 from holding Spotify Technology SA or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spotify Technology SA vs. Sage Group PLC
Performance |
| Timeline |
| Spotify Technology |
| Sage Group PLC |
Spotify Technology and Sage Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spotify Technology and Sage Group
The main advantage of trading using opposite Spotify Technology and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology position performs unexpectedly, Sage Group 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 Sage Group will offset losses from the drop in Sage Group's long position.| Spotify Technology vs. Universal Display Corp | Spotify Technology vs. Rosslyn Data Technologies | Spotify Technology vs. Travel Leisure Co | Spotify Technology vs. Gaztransport et Technigaz |
| Sage Group vs. Hecla Mining Co | Sage Group vs. Anglo Asian Mining | Sage Group vs. First Majestic Silver | Sage Group vs. Blackrock World Mining |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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