Correlation Between Sparta AG and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sparta AG and Dow Jones 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 Sparta AG and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta AG and Dow Jones Industrial, you can compare the effects of market volatilities on Sparta AG and Dow Jones 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 Sparta AG with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta AG and Dow Jones.
Diversification Opportunities for Sparta AG and Dow Jones
Very weak diversification
The 3 months correlation between Sparta and Dow is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sparta AG and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Sparta AG 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 Sparta AG are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Sparta AG i.e., Sparta AG and Dow Jones go up and down completely randomly.
Pair Corralation between Sparta AG and Dow Jones
Assuming the 90 days trading horizon Sparta AG is expected to generate 5.75 times less return on investment than Dow Jones. In addition to that, Sparta AG is 3.12 times more volatile than Dow Jones Industrial. It trades about 0.0 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of volatility. If you would invest 3,400,504 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 1,090,561 from holding Dow Jones Industrial or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Sparta AG vs. Dow Jones Industrial
Performance |
| Timeline |
Sparta AG and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sparta AG
Pair trading matchups for Sparta AG
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sparta AG and Dow Jones
The main advantage of trading using opposite Sparta AG and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta AG position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Sparta AG vs. Ameriprise Financial | Sparta AG vs. Ares Management Corp | Sparta AG vs. Superior Plus Corp | Sparta AG vs. NMI Holdings |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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