Correlation Between Juniper Networks and Sparta Capital

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

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

Diversification Opportunities for Juniper Networks and Sparta Capital

0.22

Correlation Coefficient

Juniper Networks  Sparta Capital

Modest diversification

The 3 months correlation between Juniper and Sparta is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and Juniper Networks 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 Juniper Networks are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Juniper Networks i.e., Juniper Networks and Sparta Capital go up and down completely randomly.

Pair Corralation between Juniper Networks and Sparta Capital

Given the investment horizon of 90 days Juniper Networks is expected to under-perform the Sparta Capital. But the stock apears to be less risky and, when comparing its historical volatility, Juniper Networks is 16.11 times less risky than Sparta Capital. The stock trades about -0.03 of its potential returns per unit of risk. The Sparta Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.03  in Sparta Capital on December 29, 2024 and sell it today you would lose (0.92) from holding Sparta Capital or give up 89.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Juniper Networks  vs.  Sparta Capital

Juniper Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Juniper Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Juniper Networks is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Sparta Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Sparta Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Juniper Networks and Sparta Capital

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

The idea behind Juniper Networks and Sparta Capital 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.