Correlation Between SPORT LISBOA and Insperity

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

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

Diversification Opportunities for SPORT LISBOA and Insperity

0.15

Correlation Coefficient

SPORT LISBOA  Insperity

Average diversification

The 3 months correlation between SPORT and Insperity is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Insperity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insperity and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Insperity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insperity has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Insperity go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Insperity

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 1.05 times more return on investment than Insperity. However, SPORT LISBOA is 1.05 times more volatile than Insperity. It trades about -0.01 of its potential returns per unit of risk. Insperity is currently generating about -0.02 per unit of risk. If you would invest  379.00  in SPORT LISBOA E on October 13, 2024 and sell it today you would lose (70.00) from holding SPORT LISBOA E or give up 18.47% of portfolio value over 90 days.

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

SPORT LISBOA E  vs.  Insperity

SPORT LISBOA E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Insperity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insperity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SPORT LISBOA and Insperity

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

The idea behind SPORT LISBOA E and Insperity 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.