Correlation Between Snowflake and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Snowflake and Sparta Capital 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 Snowflake and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snowflake and Sparta Capital, you can compare the effects of market volatilities on Snowflake and Sparta Capital 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 Snowflake with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snowflake and Sparta Capital.
Diversification Opportunities for Snowflake and Sparta Capital
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Snowflake and Sparta is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Snowflake 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 Snowflake are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Snowflake i.e., Snowflake and Sparta Capital go up and down completely randomly.
Pair Corralation between Snowflake and Sparta Capital
Given the investment horizon of 90 days Snowflake is expected to under-perform the Sparta Capital. But the stock apears to be less risky and, when comparing its historical volatility, Snowflake is 3.27 times less risky than Sparta Capital. The stock trades about 0.0 of its potential returns per unit of risk. The Sparta Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1.21 in Sparta Capital on August 27, 2024 and sell it today you would earn a total of 0.29 from holding Sparta Capital or generate 23.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snowflake vs. Sparta Capital
Performance |
| Timeline |
| Snowflake |
| Sparta Capital |
Snowflake and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snowflake and Sparta Capital
The main advantage of trading using opposite Snowflake and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowflake position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.The idea behind Snowflake and Sparta Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |