Correlation Between Pacific Basin and SPARTAN STORES

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Pacific Basin 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 Pacific Basin and SPARTAN STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Basin Shipping and SPARTAN STORES, you can compare the effects of market volatilities on Pacific Basin 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 Pacific Basin with a short position of SPARTAN STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and SPARTAN STORES.

Diversification Opportunities for Pacific Basin and SPARTAN STORES

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Pacific and SPARTAN is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and Pacific Basin 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 Pacific Basin Shipping 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 Pacific Basin i.e., Pacific Basin and SPARTAN STORES go up and down completely randomly.

Pair Corralation between Pacific Basin and SPARTAN STORES

Assuming the 90 days horizon Pacific Basin Shipping is expected to generate 2.4 times more return on investment than SPARTAN STORES. However, Pacific Basin is 2.4 times more volatile than SPARTAN STORES. It trades about 0.05 of its potential returns per unit of risk. SPARTAN STORES is currently generating about -0.03 per unit of risk. If you would invest  9.87  in Pacific Basin Shipping on October 23, 2024 and sell it today you would earn a total of  10.13  from holding Pacific Basin Shipping or generate 102.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Pacific Basin Shipping  vs.  SPARTAN STORES

 Performance 
       Timeline  
Pacific Basin Shipping 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pacific Basin Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
SPARTAN STORES 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SPARTAN STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pacific Basin and SPARTAN STORES Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pacific Basin and SPARTAN STORES

The main advantage of trading using opposite Pacific Basin and SPARTAN STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin 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 Pacific Basin Shipping 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

Other Complementary Tools

Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format