Correlation Between SPAR and Global Payments
Can any of the company-specific risk be diversified away by investing in both SPAR and Global Payments 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 SPAR and Global Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPAR Group and Global Payments, you can compare the effects of market volatilities on SPAR and Global Payments 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 SPAR with a short position of Global Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPAR and Global Payments.
Diversification Opportunities for SPAR and Global Payments
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPAR and Global is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SPAR Group and Global Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payments and SPAR 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 SPAR Group are associated (or correlated) with Global Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payments has no effect on the direction of SPAR i.e., SPAR and Global Payments go up and down completely randomly.
Pair Corralation between SPAR and Global Payments
Given the investment horizon of 90 days SPAR Group is expected to under-perform the Global Payments. But the stock apears to be less risky and, when comparing its historical volatility, SPAR Group is 1.19 times less risky than Global Payments. The stock trades about -0.18 of its potential returns per unit of risk. The Global Payments is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 10,176 in Global Payments on August 29, 2024 and sell it today you would earn a total of 1,570 from holding Global Payments or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPAR Group vs. Global Payments
Performance |
| Timeline |
| SPAR Group |
| Global Payments |
SPAR and Global Payments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPAR and Global Payments
The main advantage of trading using opposite SPAR and Global Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPAR position performs unexpectedly, Global Payments 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 Global Payments will offset losses from the drop in Global Payments' long position.| SPAR vs. Mitie Group Plc | SPAR vs. Dexterra Group | SPAR vs. Wildpack Beverage | SPAR vs. Intertek Group Plc |
| Global Payments vs. Copart Inc | Global Payments vs. ABM Industries Incorporated | Global Payments vs. Thomson Reuters Corp | Global Payments vs. Aramark Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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