Correlation Between Sparta Capital and Stance Equity
Can any of the company-specific risk be diversified away by investing in both Sparta Capital and Stance Equity 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 Stance Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and Stance Equity ESG, you can compare the effects of market volatilities on Sparta Capital and Stance Equity 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 Stance Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Stance Equity.
Diversification Opportunities for Sparta Capital and Stance Equity
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparta and Stance is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Stance Equity ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stance Equity ESG 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 Stance Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stance Equity ESG has no effect on the direction of Sparta Capital i.e., Sparta Capital and Stance Equity go up and down completely randomly.
Pair Corralation between Sparta Capital and Stance Equity
Assuming the 90 days horizon Sparta Capital is expected to generate 11.99 times more return on investment than Stance Equity. However, Sparta Capital is 11.99 times more volatile than Stance Equity ESG. It trades about 0.02 of its potential returns per unit of risk. Stance Equity ESG is currently generating about 0.08 per unit of risk. If you would invest 2.20 in Sparta Capital on September 2, 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparta Capital vs. Stance Equity ESG
Performance |
| Timeline |
| Sparta Capital |
| Stance Equity ESG |
Sparta Capital and Stance Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and Stance Equity
The main advantage of trading using opposite Sparta Capital and Stance Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital position performs unexpectedly, Stance Equity 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 Stance Equity will offset losses from the drop in Stance Equity'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 |
| Stance Equity vs. iShares ESG Screened | Stance Equity vs. Innovator Equity Accelerated | Stance Equity vs. iShares ESG Screened | Stance Equity vs. Innovator Equity Accelerated |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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