Correlation Between Sparta Capital and Open Text

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

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

Diversification Opportunities for Sparta Capital and Open Text

0.07

Correlation Coefficient

Sparta Capital  Open Text

Significant diversification

The 3 months correlation between Sparta and Open is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text Corp and Sparta Capital 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 Sparta Capital are associated (or correlated) with Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of Sparta Capital i.e., Sparta Capital and Open Text go up and down completely randomly.

Pair Corralation between Sparta Capital and Open Text

Assuming the 90 days horizon Sparta Capital is expected to under-perform the Open Text. In addition to that, Sparta Capital is 5.31 times more volatile than Open Text Corp. It trades about -0.23 of its total potential returns per unit of risk. Open Text Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,015  in Open Text Corp on October 24, 2024 and sell it today you would earn a total of  49.00  from holding Open Text Corp or generate 1.22% return on investment over 90 days.

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

Sparta Capital  vs.  Open Text Corp

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Open Text Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Open Text Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sparta Capital and Open Text

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

The idea behind Sparta Capital and Open Text 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 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.