Correlation Between System1 and SPAR
Can any of the company-specific risk be diversified away by investing in both System1 and SPAR 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 System1 and SPAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System1 and SPAR Group, you can compare the effects of market volatilities on System1 and SPAR 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 System1 with a short position of SPAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of System1 and SPAR.
Diversification Opportunities for System1 and SPAR
Very good diversification
The 3 months correlation between System1 and SPAR is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding System1 and SPAR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPAR Group and System1 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 System1 are associated (or correlated) with SPAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPAR Group has no effect on the direction of System1 i.e., System1 and SPAR go up and down completely randomly.
Pair Corralation between System1 and SPAR
Considering the 90-day investment horizon System1 is expected to generate 2.75 times more return on investment than SPAR. However, System1 is 2.75 times more volatile than SPAR Group. It trades about -0.04 of its potential returns per unit of risk. SPAR Group is currently generating about -0.2 per unit of risk. If you would invest 106.00 in System1 on August 28, 2024 and sell it today you would lose (7.00) from holding System1 or give up 6.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
System1 vs. SPAR Group
Performance |
| Timeline |
| System1 |
| SPAR Group |
System1 and SPAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System1 and SPAR
The main advantage of trading using opposite System1 and SPAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System1 position performs unexpectedly, SPAR 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 SPAR will offset losses from the drop in SPAR's long position.| System1 vs. Network 1 Technologies | System1 vs. Maximus | System1 vs. First Advantage Corp | System1 vs. Civeo Corp |
| SPAR vs. Mitie Group Plc | SPAR vs. Dexterra Group | SPAR vs. Wildpack Beverage | SPAR vs. Intertek Group Plc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |