Correlation Between Pine Cliff and Spartan Delta

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

By analyzing existing cross correlation between Pine Cliff Energy and Spartan Delta Corp, you can compare the effects of market volatilities on Pine Cliff and Spartan Delta 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 Pine Cliff with a short position of Spartan Delta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Spartan Delta.

Diversification Opportunities for Pine Cliff and Spartan Delta

0.78

Correlation Coefficient

Pine Cliff  Spartan Delta

Poor diversification

The 3 months correlation between Pine and Spartan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and Spartan Delta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spartan Delta Corp and Pine Cliff 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 Pine Cliff Energy are associated (or correlated) with Spartan Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spartan Delta Corp has no effect on the direction of Pine Cliff i.e., Pine Cliff and Spartan Delta go up and down completely randomly.

Pair Corralation between Pine Cliff and Spartan Delta

Assuming the 90 days trading horizon Pine Cliff Energy is expected to under-perform the Spartan Delta. But the stock apears to be less risky and, when comparing its historical volatility, Pine Cliff Energy is 1.17 times less risky than Spartan Delta. The stock trades about -0.2 of its potential returns per unit of risk. The Spartan Delta Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  333.00  in Spartan Delta Corp on December 29, 2024 and sell it today you would lose (10.00) from holding Spartan Delta Corp or give up 3.0% of portfolio value over 90 days.

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

Pine Cliff Energy  vs.  Spartan Delta Corp

Pine Cliff Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pine Cliff Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Spartan Delta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spartan Delta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Spartan Delta is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pine Cliff and Spartan Delta

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

The idea behind Pine Cliff Energy and Spartan Delta Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.