Correlation Between SPAR and Bowler Metcalf
Can any of the company-specific risk be diversified away by investing in both SPAR and Bowler Metcalf 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 Bowler Metcalf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPAR Group and Bowler Metcalf, you can compare the effects of market volatilities on SPAR and Bowler Metcalf 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 Bowler Metcalf. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPAR and Bowler Metcalf.
Diversification Opportunities for SPAR and Bowler Metcalf
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPAR and Bowler is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SPAR Group and Bowler Metcalf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowler Metcalf 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 Bowler Metcalf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowler Metcalf has no effect on the direction of SPAR i.e., SPAR and Bowler Metcalf go up and down completely randomly.
Pair Corralation between SPAR and Bowler Metcalf
Assuming the 90 days trading horizon SPAR is expected to generate 1.32 times less return on investment than Bowler Metcalf. But when comparing it to its historical volatility, SPAR Group is 3.55 times less risky than Bowler Metcalf. It trades about 0.14 of its potential returns per unit of risk. Bowler Metcalf is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 108,000 in Bowler Metcalf on August 31, 2024 and sell it today you would earn a total of 22,000 from holding Bowler Metcalf or generate 20.37% 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. Bowler Metcalf
Performance |
| Timeline |
| SPAR Group |
| Bowler Metcalf |
SPAR and Bowler Metcalf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPAR and Bowler Metcalf
The main advantage of trading using opposite SPAR and Bowler Metcalf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPAR position performs unexpectedly, Bowler Metcalf 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 Bowler Metcalf will offset losses from the drop in Bowler Metcalf's long position.| SPAR vs. Kumba Iron Ore | SPAR vs. eMedia Holdings Limited | SPAR vs. Life Healthcare | SPAR vs. Trematon Capital Investments |
| Bowler Metcalf vs. Trematon Capital Investments | Bowler Metcalf vs. African Media Entertainment | Bowler Metcalf vs. Astoria Investments | Bowler Metcalf vs. Hosken Consolidated Investments |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |