Correlation Between LifeSpeak and Sage Group
Can any of the company-specific risk be diversified away by investing in both LifeSpeak and Sage Group 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 LifeSpeak and Sage Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LifeSpeak and Sage Group PLC, you can compare the effects of market volatilities on LifeSpeak and Sage Group 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 LifeSpeak with a short position of Sage Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LifeSpeak and Sage Group.
Diversification Opportunities for LifeSpeak and Sage Group
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LifeSpeak and Sage is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LifeSpeak and Sage Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Group PLC and LifeSpeak 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 LifeSpeak are associated (or correlated) with Sage Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Group PLC has no effect on the direction of LifeSpeak i.e., LifeSpeak and Sage Group go up and down completely randomly.
Pair Corralation between LifeSpeak and Sage Group
Assuming the 90 days horizon LifeSpeak is expected to under-perform the Sage Group. In addition to that, LifeSpeak is 1.68 times more volatile than Sage Group PLC. It trades about -0.21 of its total potential returns per unit of risk. Sage Group PLC is currently generating about 0.26 per unit of volatility. If you would invest 5,262 in Sage Group PLC on August 29, 2024 and sell it today you would earn a total of 1,289 from holding Sage Group PLC or generate 24.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LifeSpeak vs. Sage Group PLC
Performance |
| Timeline |
| LifeSpeak |
| Sage Group PLC |
LifeSpeak and Sage Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LifeSpeak and Sage Group
The main advantage of trading using opposite LifeSpeak and Sage Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LifeSpeak position performs unexpectedly, Sage Group 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 Sage Group will offset losses from the drop in Sage Group's long position.The idea behind LifeSpeak and Sage Group PLC 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.| Sage Group vs. RenoWorks Software | Sage Group vs. LifeSpeak | Sage Group vs. 01 Communique Laboratory | Sage Group vs. RESAAS Services |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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