Correlation Between Sparta Capital and American Funds
Can any of the company-specific risk be diversified away by investing in both Sparta Capital and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and American Funds Growth, you can compare the effects of market volatilities on Sparta Capital and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and American Funds.
Diversification Opportunities for Sparta Capital and American Funds
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparta and American is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Sparta Capital i.e., Sparta Capital and American Funds go up and down completely randomly.
Pair Corralation between Sparta Capital and American Funds
Assuming the 90 days horizon Sparta Capital is expected to generate 13.54 times more return on investment than American Funds. However, Sparta Capital is 13.54 times more volatile than American Funds Growth. It trades about 0.04 of its potential returns per unit of risk. American Funds Growth is currently generating about 0.1 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparta Capital vs. American Funds Growth
Performance |
| Timeline |
| Sparta Capital |
| American Funds Growth |
Sparta Capital and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and American Funds
The main advantage of trading using opposite Sparta Capital and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
| American Funds vs. Gabelli Convertible And | American Funds vs. Calamos Dynamic Convertible | American Funds vs. Miller Vertible Bond | American Funds vs. Lord Abbett Vertible |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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