Correlation Between SPS Commerce and SPARTAN STORES
Can any of the company-specific risk be diversified away by investing in both SPS Commerce and SPARTAN STORES 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 SPS Commerce and SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPS Commerce and SPARTAN STORES, you can compare the effects of market volatilities on SPS Commerce and SPARTAN STORES 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 SPS Commerce with a short position of SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPS Commerce and SPARTAN STORES.
Diversification Opportunities for SPS Commerce and SPARTAN STORES
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPS and SPARTAN is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SPS Commerce and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and SPS Commerce 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 SPS Commerce are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of SPS Commerce i.e., SPS Commerce and SPARTAN STORES go up and down completely randomly.
Pair Corralation between SPS Commerce and SPARTAN STORES
Assuming the 90 days trading horizon SPS Commerce is expected to generate 1.14 times more return on investment than SPARTAN STORES. However, SPS Commerce is 1.14 times more volatile than SPARTAN STORES. It trades about 0.02 of its potential returns per unit of risk. SPARTAN STORES is currently generating about 0.01 per unit of risk. If you would invest 16,800 in SPS Commerce on September 12, 2024 and sell it today you would earn a total of 1,700 from holding SPS Commerce or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
SPS Commerce vs. SPARTAN STORES
Performance |
| Timeline |
| SPS Commerce |
| SPARTAN STORES |
SPS Commerce and SPARTAN STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPS Commerce and SPARTAN STORES
The main advantage of trading using opposite SPS Commerce and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPS Commerce position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.| SPS Commerce vs. SPARTAN STORES | SPS Commerce vs. Apollo Medical Holdings | SPS Commerce vs. Diamyd Medical AB | SPS Commerce vs. QURATE RETAIL INC |
| SPARTAN STORES vs. Wyndham Hotels Resorts | SPARTAN STORES vs. Luckin Coffee | SPARTAN STORES vs. InterContinental Hotels Group | SPARTAN STORES vs. Liberty Broadband |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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