Correlation Between Sprout Social and E2open Parent
Can any of the company-specific risk be diversified away by investing in both Sprout Social and E2open Parent 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 Sprout Social and E2open Parent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprout Social and E2open Parent Holdings, you can compare the effects of market volatilities on Sprout Social and E2open Parent 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 Sprout Social with a short position of E2open Parent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprout Social and E2open Parent.
Diversification Opportunities for Sprout Social and E2open Parent
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sprout and E2open is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and E2open Parent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E2open Parent Holdings and Sprout Social 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 Sprout Social are associated (or correlated) with E2open Parent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E2open Parent Holdings has no effect on the direction of Sprout Social i.e., Sprout Social and E2open Parent go up and down completely randomly.
Pair Corralation between Sprout Social and E2open Parent
Considering the 90-day investment horizon Sprout Social is expected to generate 1.55 times more return on investment than E2open Parent. However, Sprout Social is 1.55 times more volatile than E2open Parent Holdings. It trades about 0.23 of its potential returns per unit of risk. E2open Parent Holdings is currently generating about 0.02 per unit of risk. If you would invest 2,710 in Sprout Social on August 28, 2024 and sell it today you would earn a total of 579.00 from holding Sprout Social or generate 21.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprout Social vs. E2open Parent Holdings
Performance |
| Timeline |
| Sprout Social |
| E2open Parent Holdings |
Sprout Social and E2open Parent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprout Social and E2open Parent
The main advantage of trading using opposite Sprout Social and E2open Parent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprout Social position performs unexpectedly, E2open Parent 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 E2open Parent will offset losses from the drop in E2open Parent's long position.The idea behind Sprout Social and E2open Parent Holdings 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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