Correlation Between SPAR and System1
Can any of the company-specific risk be diversified away by investing in both SPAR and System1 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 System1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPAR Group and System1, you can compare the effects of market volatilities on SPAR and System1 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 System1. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPAR and System1.
Diversification Opportunities for SPAR and System1
Excellent diversification
The 3 months correlation between SPAR and System1 is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding SPAR Group and System1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System1 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 System1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System1 has no effect on the direction of SPAR i.e., SPAR and System1 go up and down completely randomly.
Pair Corralation between SPAR and System1
Given the investment horizon of 90 days SPAR Group is expected to under-perform the System1. But the stock apears to be less risky and, when comparing its historical volatility, SPAR Group is 2.6 times less risky than System1. The stock trades about -0.16 of its potential returns per unit of risk. The System1 is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 102.00 in System1 on August 24, 2024 and sell it today you would lose (6.00) from holding System1 or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPAR Group vs. System1
Performance |
| Timeline |
| SPAR Group |
| System1 |
SPAR and System1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPAR and System1
The main advantage of trading using opposite SPAR and System1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPAR position performs unexpectedly, System1 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 System1 will offset losses from the drop in System1's long position.| SPAR vs. Mitie Group Plc | SPAR vs. Dexterra Group | SPAR vs. Wildpack Beverage | SPAR vs. Intertek Group Plc |
| System1 vs. Network 1 Technologies | System1 vs. Maximus | System1 vs. First Advantage Corp | System1 vs. Civeo Corp |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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