Correlation Between Bid and SPAR
Can any of the company-specific risk be diversified away by investing in both Bid and SPAR 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 Bid and SPAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bid Corporation and SPAR Group, you can compare the effects of market volatilities on Bid and SPAR 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 Bid with a short position of SPAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bid and SPAR.
Diversification Opportunities for Bid and SPAR
Pay attention - limited upside
The 3 months correlation between Bid and SPAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bid Corp. and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group and Bid 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 Bid Corporation are associated (or correlated) with SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of Bid i.e., Bid and SPAR go up and down completely randomly.
Pair Corralation between Bid and SPAR
Assuming the 90 days trading horizon Bid is expected to generate 1.19 times less return on investment than SPAR. In addition to that, Bid is 1.28 times more volatile than SPAR Group. It trades about 0.1 of its total potential returns per unit of risk. SPAR Group is currently generating about 0.16 per unit of volatility. If you would invest 1,292,000 in SPAR Group on August 28, 2024 and sell it today you would earn a total of 60,700 from holding SPAR Group or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bid Corp. vs. SPAR Group
Performance |
| Timeline |
| Bid Corporation |
| SPAR Group |
Bid and SPAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bid and SPAR
The main advantage of trading using opposite Bid and SPAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bid position performs unexpectedly, SPAR 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 SPAR will offset losses from the drop in SPAR's long position.The idea behind Bid Corporation and SPAR Group 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.| SPAR vs. Centaur Bci Balanced | SPAR vs. Sabvest Capital | SPAR vs. Growthpoint Properties | SPAR vs. AfricaRhodium ETF |
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 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..
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