Correlation Between SAP SE and Sparta Commercial
Can any of the company-specific risk be diversified away by investing in both SAP SE and Sparta Commercial 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 SAP SE and Sparta Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Sparta Commercial Services, you can compare the effects of market volatilities on SAP SE and Sparta Commercial 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 SAP SE with a short position of Sparta Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAP SE and Sparta Commercial.
Diversification Opportunities for SAP SE and Sparta Commercial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SAP and Sparta is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Sparta Commercial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Commercial and SAP SE 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 SAP SE are associated (or correlated) with Sparta Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Commercial has no effect on the direction of SAP SE i.e., SAP SE and Sparta Commercial go up and down completely randomly.
Pair Corralation between SAP SE and Sparta Commercial
Assuming the 90 days horizon SAP SE is expected to generate 6.1 times less return on investment than Sparta Commercial. But when comparing it to its historical volatility, SAP SE is 6.11 times less risky than Sparta Commercial. It trades about 0.13 of its potential returns per unit of risk. Sparta Commercial Services is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 9.28 in Sparta Commercial Services on September 2, 2024 and sell it today you would earn a total of 16.72 from holding Sparta Commercial Services or generate 180.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE vs. Sparta Commercial Services
Performance |
| Timeline |
| SAP SE |
| Sparta Commercial |
SAP SE and Sparta Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAP SE and Sparta Commercial
The main advantage of trading using opposite SAP SE and Sparta Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP SE position performs unexpectedly, Sparta Commercial 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 Commercial will offset losses from the drop in Sparta Commercial's long position.| SAP SE vs. RenoWorks Software | SAP SE vs. 01 Communique Laboratory | SAP SE vs. Temenos Group AG | SAP SE vs. Xero Limited |
| Sparta Commercial vs. Waldencast Acquisition Corp | Sparta Commercial vs. Alkami Technology | Sparta Commercial vs. ADEIA P | Sparta Commercial vs. Paycor HCM |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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