Correlation Between American Funds and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Growth and Sparta Capital, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sparta Capital.
Diversification Opportunities for American Funds and Sparta Capital
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Sparta is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Growth and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and American Funds 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 American Funds Growth 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 American Funds i.e., American Funds and Sparta Capital go up and down completely randomly.
Pair Corralation between American Funds and Sparta Capital
Assuming the 90 days horizon American Funds is expected to generate 5.08 times less return on investment than Sparta Capital. But when comparing it to its historical volatility, American Funds Growth is 13.54 times less risky than Sparta Capital. It trades about 0.1 of its potential returns per unit of risk. Sparta Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Sparta Capital on August 27, 2024 and sell it today you would earn a total of 0.40 from holding Sparta Capital or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Growth vs. Sparta Capital
Performance |
| Timeline |
| American Funds Growth |
| Sparta Capital |
American Funds and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Sparta Capital
The main advantage of trading using opposite American Funds and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Gabelli Convertible And | American Funds vs. Calamos Dynamic Convertible | American Funds vs. Miller Vertible Bond | American Funds vs. Lord Abbett Vertible |
| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |