Correlation Between Sage Group and LifeSpeak
Can any of the company-specific risk be diversified away by investing in both Sage Group and LifeSpeak 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 Sage Group and LifeSpeak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Group PLC and LifeSpeak, you can compare the effects of market volatilities on Sage Group and LifeSpeak 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 Sage Group with a short position of LifeSpeak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and LifeSpeak.
Diversification Opportunities for Sage Group and LifeSpeak
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and LifeSpeak is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and LifeSpeak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSpeak and Sage Group 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 Sage Group PLC are associated (or correlated) with LifeSpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSpeak has no effect on the direction of Sage Group i.e., Sage Group and LifeSpeak go up and down completely randomly.
Pair Corralation between Sage Group and LifeSpeak
Assuming the 90 days horizon Sage Group PLC is expected to generate 0.57 times more return on investment than LifeSpeak. However, Sage Group PLC is 1.76 times less risky than LifeSpeak. It trades about 0.13 of its potential returns per unit of risk. LifeSpeak is currently generating about -0.08 per unit of risk. If you would invest 5,516 in Sage Group PLC on August 25, 2024 and sell it today you would earn a total of 905.00 from holding Sage Group PLC or generate 16.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Group PLC vs. LifeSpeak
Performance |
| Timeline |
| Sage Group PLC |
| LifeSpeak |
Sage Group and LifeSpeak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and LifeSpeak
The main advantage of trading using opposite Sage Group and LifeSpeak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group position performs unexpectedly, LifeSpeak 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 LifeSpeak will offset losses from the drop in LifeSpeak's long position.| Sage Group vs. Salesforce | Sage Group vs. SAP SE ADR | Sage Group vs. ServiceNow | Sage Group vs. Intuit Inc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
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| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |