Correlation Between Falcon Energy and Sparx Technology
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Sparx Technology 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 Falcon Energy and Sparx Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Sparx Technology, you can compare the effects of market volatilities on Falcon Energy and Sparx Technology 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 Falcon Energy with a short position of Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Sparx Technology.
Diversification Opportunities for Falcon Energy and Sparx Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Sparx is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Falcon Energy i.e., Falcon Energy and Sparx Technology go up and down completely randomly.
Pair Corralation between Falcon Energy and Sparx Technology
Assuming the 90 days trading horizon Falcon Energy is expected to generate 27.78 times less return on investment than Sparx Technology. But when comparing it to its historical volatility, Falcon Energy Materials is 12.88 times less risky than Sparx Technology. It trades about 0.02 of its potential returns per unit of risk. Sparx Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Sparx Technology on September 2, 2024 and sell it today you would earn a total of 2,590 from holding Sparx Technology or generate 129500.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Falcon Energy Materials vs. Sparx Technology
Performance |
| Timeline |
| Falcon Energy Materials |
| Sparx Technology |
Falcon Energy and Sparx Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Sparx Technology
The main advantage of trading using opposite Falcon Energy and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, Sparx Technology 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 Sparx Technology will offset losses from the drop in Sparx Technology's long position.| Falcon Energy vs. Brookfield Office Properties | Falcon Energy vs. TGS Esports | Falcon Energy vs. Costco Wholesale Corp | Falcon Energy vs. Canlan Ice Sports |
| Sparx Technology vs. VerticalScope Holdings | Sparx Technology vs. WildBrain | Sparx Technology vs. iShares Canadian HYBrid | Sparx Technology vs. Altagas Cum Red |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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