Correlation Between Sparta Capital and Prudential High
Can any of the company-specific risk be diversified away by investing in both Sparta Capital and Prudential High 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 Prudential High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and Prudential High Yield, you can compare the effects of market volatilities on Sparta Capital and Prudential High 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 Prudential High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Prudential High.
Diversification Opportunities for Sparta Capital and Prudential High
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sparta and Prudential is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Prudential High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential High Yield 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 Prudential High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential High Yield has no effect on the direction of Sparta Capital i.e., Sparta Capital and Prudential High go up and down completely randomly.
Pair Corralation between Sparta Capital and Prudential High
Assuming the 90 days horizon Sparta Capital is expected to generate 43.78 times more return on investment than Prudential High. However, Sparta Capital is 43.78 times more volatile than Prudential High Yield. It trades about 0.02 of its potential returns per unit of risk. Prudential High Yield is currently generating about 0.13 per unit of risk. If you would invest 1.21 in Sparta Capital on January 22, 2025 and sell it today you would lose (1.10) from holding Sparta Capital or give up 90.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparta Capital vs. Prudential High Yield
Performance |
| Timeline |
| Sparta Capital |
| Prudential High Yield |
Sparta Capital and Prudential High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and Prudential High
The main advantage of trading using opposite Sparta Capital and Prudential High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital position performs unexpectedly, Prudential High 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 Prudential High will offset losses from the drop in Prudential High'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 |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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