Correlation Between Spartan Delta and California Resources

Can any of the company-specific risk be diversified away by investing in both Spartan Delta and California Resources 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 Delta and California Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spartan Delta Corp and California Resources, you can compare the effects of market volatilities on Spartan Delta and California Resources 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 Delta with a short position of California Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spartan Delta and California Resources.

Diversification Opportunities for Spartan Delta and California Resources

-0.51

Correlation Coefficient

Spartan Delta  California Resources

Excellent diversification

The 3 months correlation between Spartan and California is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Spartan Delta Corp and California Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources and Spartan Delta 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 Delta Corp are associated (or correlated) with California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources has no effect on the direction of Spartan Delta i.e., Spartan Delta and California Resources go up and down completely randomly.

Pair Corralation between Spartan Delta and California Resources

If you would invest  223.00  in Spartan Delta Corp on October 11, 2024 and sell it today you would earn a total of  53.00  from holding Spartan Delta Corp or generate 23.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

Spartan Delta Corp  vs.  California Resources

Spartan Delta Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spartan Delta Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Spartan Delta is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

California Resources

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days California Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile basic indicators, California Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spartan Delta and California Resources

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

The idea behind Spartan Delta Corp and California Resources 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.