Correlation Between Vista Outdoor and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Vista Outdoor and Sparta Capital 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 Vista Outdoor and Sparta Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vista Outdoor and Sparta Capital, you can compare the effects of market volatilities on Vista Outdoor and Sparta Capital 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 Vista Outdoor with a short position of Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Outdoor and Sparta Capital.
Diversification Opportunities for Vista Outdoor and Sparta Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vista and Sparta is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vista Outdoor and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Vista Outdoor 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 Vista Outdoor are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Vista Outdoor i.e., Vista Outdoor and Sparta Capital go up and down completely randomly.
Pair Corralation between Vista Outdoor and Sparta Capital
Given the investment horizon of 90 days Vista Outdoor is expected to generate 0.45 times more return on investment than Sparta Capital. However, Vista Outdoor is 2.2 times less risky than Sparta Capital. It trades about 0.18 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.15 per unit of risk. If you would invest 3,924 in Vista Outdoor on August 26, 2024 and sell it today you would earn a total of 518.00 from holding Vista Outdoor or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vista Outdoor vs. Sparta Capital
Performance |
| Timeline |
| Vista Outdoor |
| Sparta Capital |
Vista Outdoor and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vista Outdoor and Sparta Capital
The main advantage of trading using opposite Vista Outdoor and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Outdoor position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital's long position.| Vista Outdoor vs. MCBC Holdings | Vista Outdoor vs. Winnebago Industries | Vista Outdoor vs. LCI Industries | Vista Outdoor vs. Thor Industries |
| Sparta Capital vs. Copa Holdings SA | Sparta Capital vs. United Airlines Holdings | Sparta Capital vs. Delta Air Lines | Sparta Capital vs. SkyWest |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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