Correlation Between Spartan Delta and Prairie Provident

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

Diversification Opportunities for Spartan Delta and Prairie Provident

0.66

Correlation Coefficient

Spartan Delta  Prairie Provident

Poor diversification

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

Pair Corralation between Spartan Delta and Prairie Provident

Assuming the 90 days horizon Spartan Delta Corp is expected to under-perform the Prairie Provident. But the pink sheet apears to be less risky and, when comparing its historical volatility, Spartan Delta Corp is 3.94 times less risky than Prairie Provident. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Prairie Provident Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2.69  in Prairie Provident Resources on September 18, 2024 and sell it today you would lose (0.59) from holding Prairie Provident Resources or give up 21.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.65%
Values	Daily Returns

Spartan Delta Corp  vs.  Prairie Provident Resources

Spartan Delta Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Prairie Provident

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Spartan Delta and Prairie Provident

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

The idea behind Spartan Delta Corp and Prairie Provident 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.