Correlation Between Marvel Discovery and Sparx Technology

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

By analyzing existing cross correlation between Marvel Discovery Corp and Sparx Technology, you can compare the effects of market volatilities on Marvel Discovery and Sparx Technology 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 Marvel Discovery with a short position of Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marvel Discovery and Sparx Technology.

Diversification Opportunities for Marvel Discovery and Sparx Technology

-0.52

Correlation Coefficient

Marvel Discovery  Sparx Technology

Excellent diversification

The 3 months correlation between Marvel and Sparx is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marvel Discovery Corp and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and Marvel Discovery 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 Marvel Discovery Corp are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Marvel Discovery i.e., Marvel Discovery and Sparx Technology go up and down completely randomly.

Pair Corralation between Marvel Discovery and Sparx Technology

Assuming the 90 days trading horizon Marvel Discovery Corp is expected to generate 9.48 times more return on investment than Sparx Technology. However, Marvel Discovery is 9.48 times more volatile than Sparx Technology. It trades about 0.06 of its potential returns per unit of risk. Sparx Technology is currently generating about 0.19 per unit of risk. If you would invest  1.50  in Marvel Discovery Corp on October 7, 2024 and sell it today you would lose (0.50) from holding Marvel Discovery Corp or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Marvel Discovery Corp  vs.  Sparx Technology

Marvel Discovery Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marvel Discovery Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marvel Discovery showed solid returns over the last few months and may actually be approaching a breakup point.

Sparx Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marvel Discovery and Sparx Technology

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

The idea behind Marvel Discovery Corp and Sparx Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.