Correlation Between Sparx Technology and Falcon Energy
Can any of the company-specific risk be diversified away by investing in both Sparx Technology and Falcon Energy 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 Sparx Technology and Falcon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparx Technology and Falcon Energy Materials, you can compare the effects of market volatilities on Sparx Technology and Falcon Energy 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 Sparx Technology with a short position of Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and Falcon Energy.
Diversification Opportunities for Sparx Technology and Falcon Energy
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparx and Falcon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials and Sparx Technology 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 Sparx Technology are associated (or correlated) with Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Sparx Technology i.e., Sparx Technology and Falcon Energy go up and down completely randomly.
Pair Corralation between Sparx Technology and Falcon Energy
Assuming the 90 days trading horizon Sparx Technology is expected to generate 12.88 times more return on investment than Falcon Energy. However, Sparx Technology is 12.88 times more volatile than Falcon Energy Materials. It trades about 0.05 of its potential returns per unit of risk. Falcon Energy Materials is currently generating about 0.02 per unit of risk. If you would invest 2.00 in Sparx Technology on September 2, 2024 and sell it today you would earn a total of 2,590 from holding Sparx Technology or generate 129500.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sparx Technology vs. Falcon Energy Materials
Performance |
| Timeline |
| Sparx Technology |
| Falcon Energy Materials |
Sparx Technology and Falcon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparx Technology and Falcon Energy
The main advantage of trading using opposite Sparx Technology and Falcon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparx Technology position performs unexpectedly, Falcon Energy 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 Falcon Energy will offset losses from the drop in Falcon Energy's long position.| Sparx Technology vs. VerticalScope Holdings | Sparx Technology vs. WildBrain | Sparx Technology vs. iShares Canadian HYBrid | Sparx Technology vs. Altagas Cum Red |
| Falcon Energy vs. Brookfield Office Properties | Falcon Energy vs. TGS Esports | Falcon Energy vs. Costco Wholesale Corp | Falcon Energy vs. Canlan Ice Sports |
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.
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