Correlation Between Akzo Nobel and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Akzo Nobel and Sparta Capital 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 Akzo Nobel and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akzo Nobel NV and Sparta Capital, you can compare the effects of market volatilities on Akzo Nobel and Sparta Capital 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 Akzo Nobel with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akzo Nobel and Sparta Capital.
Diversification Opportunities for Akzo Nobel and Sparta Capital
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Akzo and Sparta is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Akzo Nobel NV and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Akzo Nobel 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 Akzo Nobel NV are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Akzo Nobel i.e., Akzo Nobel and Sparta Capital go up and down completely randomly.
Pair Corralation between Akzo Nobel and Sparta Capital
Assuming the 90 days horizon Akzo Nobel NV is expected to generate 0.91 times more return on investment than Sparta Capital. However, Akzo Nobel NV is 1.1 times less risky than Sparta Capital. It trades about -0.07 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.09 per unit of risk. If you would invest 6,992 in Akzo Nobel NV on September 1, 2024 and sell it today you would lose (1,217) from holding Akzo Nobel NV or give up 17.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akzo Nobel NV vs. Sparta Capital
Performance |
| Timeline |
| Akzo Nobel NV |
| Sparta Capital |
Akzo Nobel and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akzo Nobel and Sparta Capital
The main advantage of trading using opposite Akzo Nobel and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akzo Nobel position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| Akzo Nobel vs. Sherwin Williams Co | Akzo Nobel vs. Air Liquide SA | Akzo Nobel vs. Air Products and | Akzo Nobel vs. Ecolab Inc |
| Sparta Capital vs. Legacy Education | Sparta Capital vs. Apple Inc | Sparta Capital vs. NVIDIA | Sparta Capital vs. Microsoft |
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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