Correlation Between Spartan Delta and Invictus Energy

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

Diversification Opportunities for Spartan Delta and Invictus Energy

0.34

Correlation Coefficient

Spartan Delta  Invictus Energy

Weak diversification

The 3 months correlation between Spartan and Invictus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Spartan Delta Corp and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus 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 Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of Spartan Delta i.e., Spartan Delta and Invictus Energy go up and down completely randomly.

Pair Corralation between Spartan Delta and Invictus Energy

Assuming the 90 days horizon Spartan Delta is expected to generate 3.77 times less return on investment than Invictus Energy. But when comparing it to its historical volatility, Spartan Delta Corp is 3.33 times less risky than Invictus Energy. It trades about 0.03 of its potential returns per unit of risk. Invictus Energy Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4.68  in Invictus Energy Limited on November 20, 2024 and sell it today you would lose (0.25) from holding Invictus Energy Limited or give up 5.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Spartan Delta Corp  vs.  Invictus Energy Limited

Spartan Delta Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spartan Delta Corp are ranked lower than 2 (%) 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.

Invictus Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invictus Energy Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invictus Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spartan Delta and Invictus Energy

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

The idea behind Spartan Delta Corp and Invictus Energy Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.