Correlation Between Sparta Capital and Arbor Realty
Can any of the company-specific risk be diversified away by investing in both Sparta Capital and Arbor Realty 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 Capital and Arbor Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and Arbor Realty Trust, you can compare the effects of market volatilities on Sparta Capital and Arbor Realty 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 Capital with a short position of Arbor Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Arbor Realty.
Diversification Opportunities for Sparta Capital and Arbor Realty
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sparta and Arbor is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Arbor Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Realty Trust and Sparta Capital 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 Capital are associated (or correlated) with Arbor Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Realty Trust has no effect on the direction of Sparta Capital i.e., Sparta Capital and Arbor Realty go up and down completely randomly.
Pair Corralation between Sparta Capital and Arbor Realty
Assuming the 90 days horizon Sparta Capital is expected to generate 8.75 times more return on investment than Arbor Realty. However, Sparta Capital is 8.75 times more volatile than Arbor Realty Trust. It trades about 0.04 of its potential returns per unit of risk. Arbor Realty Trust is currently generating about 0.04 per unit of risk. 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparta Capital vs. Arbor Realty Trust
Performance |
| Timeline |
| Sparta Capital |
| Arbor Realty Trust |
Sparta Capital and Arbor Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and Arbor Realty
The main advantage of trading using opposite Sparta Capital and Arbor Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital position performs unexpectedly, Arbor Realty 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 Arbor Realty will offset losses from the drop in Arbor Realty's long position.| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |