Correlation Between Sparta Capital and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Sparta Capital and Invesco SP 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 Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and Invesco SP 500, you can compare the effects of market volatilities on Sparta Capital and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Invesco SP.
Diversification Opportunities for Sparta Capital and Invesco SP
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sparta and Invesco is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Sparta Capital i.e., Sparta Capital and Invesco SP go up and down completely randomly.
Pair Corralation between Sparta Capital and Invesco SP
Assuming the 90 days horizon Sparta Capital is expected to generate 12.63 times more return on investment than Invesco SP. However, Sparta Capital is 12.63 times more volatile than Invesco SP 500. It trades about 0.02 of its potential returns per unit of risk. Invesco SP 500 is currently generating about -0.01 per unit of risk. If you would invest 2.20 in Sparta Capital on September 12, 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 Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Sparta Capital vs. Invesco SP 500
Performance |
| Timeline |
| Sparta Capital |
| Invesco SP 500 |
Sparta Capital and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and Invesco SP
The main advantage of trading using opposite Sparta Capital and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP'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 |
| Invesco SP vs. Invesco SP 500 | Invesco SP vs. Invesco SP 500 | Invesco SP vs. Aquagold International | Invesco SP vs. Morningstar Unconstrained Allocation |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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