Correlation Between Spartan Delta and Cardinal Energy

Can any of the company-specific risk be diversified away by investing in both Spartan Delta and Cardinal Energy 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 Cardinal Energy 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 Cardinal Energy, you can compare the effects of market volatilities on Spartan Delta and Cardinal Energy 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 Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spartan Delta and Cardinal Energy.

Diversification Opportunities for Spartan Delta and Cardinal Energy

0.79

Correlation Coefficient

Spartan Delta  Cardinal Energy

Poor diversification

The 3 months correlation between Spartan and Cardinal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Spartan Delta Corp and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy 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 Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Spartan Delta i.e., Spartan Delta and Cardinal Energy go up and down completely randomly.

Pair Corralation between Spartan Delta and Cardinal Energy

Assuming the 90 days horizon Spartan Delta Corp is expected to under-perform the Cardinal Energy. In addition to that, Spartan Delta is 2.38 times more volatile than Cardinal Energy. It trades about -0.04 of its total potential returns per unit of risk. Cardinal Energy is currently generating about 0.01 per unit of volatility. If you would invest  482.00  in Cardinal Energy on October 11, 2024 and sell it today you would lose (11.00) from holding Cardinal Energy or give up 2.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.94%
Values	Daily Returns

Spartan Delta Corp  vs.  Cardinal Energy

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.

Cardinal Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardinal Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Cardinal Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Spartan Delta and Cardinal Energy

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

The idea behind Spartan Delta Corp and Cardinal Energy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..