Correlation Between SPARTAN STORES and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both SPARTAN STORES and Rio Tinto 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 SPARTAN STORES and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPARTAN STORES and Rio Tinto Group, you can compare the effects of market volatilities on SPARTAN STORES and Rio Tinto 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 SPARTAN STORES with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and Rio Tinto.
Diversification Opportunities for SPARTAN STORES and Rio Tinto
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPARTAN and Rio is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group and SPARTAN STORES 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 SPARTAN STORES are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and Rio Tinto go up and down completely randomly.
Pair Corralation between SPARTAN STORES and Rio Tinto
Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the Rio Tinto. In addition to that, SPARTAN STORES is 1.19 times more volatile than Rio Tinto Group. It trades about -0.01 of its total potential returns per unit of risk. Rio Tinto Group is currently generating about 0.01 per unit of volatility. If you would invest 7,421 in Rio Tinto Group on September 14, 2024 and sell it today you would earn a total of 91.00 from holding Rio Tinto Group or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPARTAN STORES vs. Rio Tinto Group
Performance |
| Timeline |
| SPARTAN STORES |
| Rio Tinto Group |
SPARTAN STORES and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPARTAN STORES and Rio Tinto
The main advantage of trading using opposite SPARTAN STORES and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN STORES position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc | SPARTAN STORES vs. Apple Inc |
| Rio Tinto vs. Corporate Travel Management | Rio Tinto vs. Q2M Managementberatung AG | Rio Tinto vs. Granite Construction | Rio Tinto vs. DAIRY FARM INTL |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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