Correlation Between Coor Service and SPARTAN STORES

Can any of the company-specific risk be diversified away by investing in both Coor Service and SPARTAN STORES 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 Coor Service and SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coor Service Management and SPARTAN STORES, you can compare the effects of market volatilities on Coor Service and SPARTAN STORES 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 Coor Service with a short position of SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coor Service and SPARTAN STORES.

Diversification Opportunities for Coor Service and SPARTAN STORES

0.66

Correlation Coefficient

Coor Service  SPARTAN STORES

Poor diversification

The 3 months correlation between Coor and SPARTAN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Coor Service Management and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and Coor Service 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 Coor Service Management are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of Coor Service i.e., Coor Service and SPARTAN STORES go up and down completely randomly.

Pair Corralation between Coor Service and SPARTAN STORES

Assuming the 90 days horizon Coor Service Management is expected to generate 0.73 times more return on investment than SPARTAN STORES. However, Coor Service Management is 1.37 times less risky than SPARTAN STORES. It trades about 0.15 of its potential returns per unit of risk. SPARTAN STORES is currently generating about -0.1 per unit of risk. If you would invest  300.00  in Coor Service Management on October 11, 2024 and sell it today you would earn a total of  10.00  from holding Coor Service Management or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Coor Service Management  vs.  SPARTAN STORES

Coor Service Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coor Service Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPARTAN STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Coor Service and SPARTAN STORES

The main advantage of trading using opposite Coor Service and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coor Service position performs unexpectedly, SPARTAN STORES 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 SPARTAN STORES will offset losses from the drop in SPARTAN STORES's long position.

The idea behind Coor Service Management and SPARTAN STORES 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.