Correlation Between SPORT LISBOA and SPARTAN STORES

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

Diversification Opportunities for SPORT LISBOA and SPARTAN STORES

0.09

Correlation Coefficient

SPORT LISBOA  SPARTAN STORES

Significant diversification

The 3 months correlation between SPORT and SPARTAN is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES 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 SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and SPARTAN STORES go up and down completely randomly.

Pair Corralation between SPORT LISBOA and SPARTAN STORES

Assuming the 90 days horizon SPORT LISBOA E is expected to generate 1.69 times more return on investment than SPARTAN STORES. However, SPORT LISBOA is 1.69 times more volatile than SPARTAN STORES. It trades about 0.02 of its potential returns per unit of risk. SPARTAN STORES is currently generating about 0.03 per unit of risk. If you would invest  312.00  in SPORT LISBOA E on December 27, 2024 and sell it today you would earn a total of  4.00  from holding SPORT LISBOA E or generate 1.28% return on investment over 90 days.

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

SPORT LISBOA E  vs.  SPARTAN STORES

SPORT LISBOA E

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SPARTAN STORES

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTAN STORES are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, SPARTAN STORES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPORT LISBOA and SPARTAN STORES

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

The idea behind SPORT LISBOA E and SPARTAN STORES 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.