Correlation Between Sparta Capital and Juniper Networks
Can any of the company-specific risk be diversified away by investing in both Sparta Capital and Juniper Networks 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 Juniper Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and Juniper Networks, you can compare the effects of market volatilities on Sparta Capital and Juniper Networks 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 Juniper Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Juniper Networks.
Diversification Opportunities for Sparta Capital and Juniper Networks
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sparta and Juniper is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Juniper Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Networks 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 Juniper Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Networks has no effect on the direction of Sparta Capital i.e., Sparta Capital and Juniper Networks go up and down completely randomly.
Pair Corralation between Sparta Capital and Juniper Networks
Assuming the 90 days horizon Sparta Capital is expected to generate 5.66 times more return on investment than Juniper Networks. However, Sparta Capital is 5.66 times more volatile than Juniper Networks. It trades about 0.02 of its potential returns per unit of risk. Juniper Networks is currently generating about 0.04 per unit of risk. If you would invest 2.20 in Sparta Capital on September 4, 2024 and sell it today you would lose (0.70) from holding Sparta Capital or give up 31.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sparta Capital vs. Juniper Networks
Performance |
| Timeline |
| Sparta Capital |
| Juniper Networks |
Sparta Capital and Juniper Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and Juniper Networks
The main advantage of trading using opposite Sparta Capital and Juniper Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital position performs unexpectedly, Juniper Networks 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 Juniper Networks will offset losses from the drop in Juniper Networks' long position.| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
| Juniper Networks vs. Infinera | Juniper Networks vs. Lumentum Holdings | Juniper Networks vs. Extreme Networks | Juniper Networks vs. Clearfield |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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