Correlation Between SPARTA INFRA and LIFE CAPITAL
Can any of the company-specific risk be diversified away by investing in both SPARTA INFRA and LIFE 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 SPARTA INFRA and LIFE CAPITAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPARTA INFRA FIC and LIFE CAPITAL PARTNERS, you can compare the effects of market volatilities on SPARTA INFRA and LIFE 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 SPARTA INFRA with a short position of LIFE CAPITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTA INFRA and LIFE CAPITAL.
Diversification Opportunities for SPARTA INFRA and LIFE CAPITAL
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPARTA and LIFE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPARTA INFRA FIC and LIFE CAPITAL PARTNERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE CAPITAL PARTNERS and SPARTA INFRA 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 SPARTA INFRA FIC are associated (or correlated) with LIFE CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE CAPITAL PARTNERS has no effect on the direction of SPARTA INFRA i.e., SPARTA INFRA and LIFE CAPITAL go up and down completely randomly.
Pair Corralation between SPARTA INFRA and LIFE CAPITAL
Assuming the 90 days trading horizon SPARTA INFRA FIC is expected to under-perform the LIFE CAPITAL. But the fund apears to be less risky and, when comparing its historical volatility, SPARTA INFRA FIC is 1.9 times less risky than LIFE CAPITAL. The fund trades about -0.11 of its potential returns per unit of risk. The LIFE CAPITAL PARTNERS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 995.00 in LIFE CAPITAL PARTNERS on September 1, 2024 and sell it today you would lose (40.00) from holding LIFE CAPITAL PARTNERS or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
SPARTA INFRA FIC vs. LIFE CAPITAL PARTNERS
Performance |
| Timeline |
| SPARTA INFRA FIC |
| LIFE CAPITAL PARTNERS |
SPARTA INFRA and LIFE CAPITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPARTA INFRA and LIFE CAPITAL
The main advantage of trading using opposite SPARTA INFRA and LIFE CAPITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTA INFRA position performs unexpectedly, LIFE 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 LIFE CAPITAL will offset losses from the drop in LIFE CAPITAL's long position.| SPARTA INFRA vs. Real Estate Investment | SPARTA INFRA vs. NAVI CRDITO IMOBILIRIO | SPARTA INFRA vs. LIFE CAPITAL PARTNERS | SPARTA INFRA vs. Cshg Jhsf Prime |
| LIFE CAPITAL vs. Energisa SA | LIFE CAPITAL vs. BTG Pactual Logstica | LIFE CAPITAL vs. Plano Plano Desenvolvimento | LIFE CAPITAL vs. Companhia Habitasul de |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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