Correlation Between Intuit and Sparta Commercial

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

By analyzing existing cross correlation between Intuit Inc and Sparta Commercial Services, you can compare the effects of market volatilities on Intuit and Sparta Commercial 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 Intuit with a short position of Sparta Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuit and Sparta Commercial.

Diversification Opportunities for Intuit and Sparta Commercial

-0.32

Correlation Coefficient

Intuit  Sparta Commercial

Very good diversification

The 3 months correlation between Intuit and Sparta is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and Sparta Commercial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Commercial and Intuit 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 Intuit Inc are associated (or correlated) with Sparta Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Commercial has no effect on the direction of Intuit i.e., Intuit and Sparta Commercial go up and down completely randomly.

Pair Corralation between Intuit and Sparta Commercial

Given the investment horizon of 90 days Intuit is expected to generate 4.08 times less return on investment than Sparta Commercial. But when comparing it to its historical volatility, Intuit Inc is 5.41 times less risky than Sparta Commercial. It trades about 0.08 of its potential returns per unit of risk. Sparta Commercial Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Sparta Commercial Services on August 31, 2024 and sell it today you would earn a total of  10.00  from holding Sparta Commercial Services or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Intuit Inc  vs.  Sparta Commercial Services

Intuit Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Intuit is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sparta Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Commercial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Intuit and Sparta Commercial

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

The idea behind Intuit Inc and Sparta Commercial Services 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.