Correlation Between Sparta Capital and Capitol Series

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

By analyzing existing cross correlation between Sparta Capital and Capitol Series Trust, you can compare the effects of market volatilities on Sparta Capital and Capitol Series 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 Capitol Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Capitol Series.

Diversification Opportunities for Sparta Capital and Capitol Series

-0.85

Correlation Coefficient

Sparta Capital  Capitol Series

Pay attention - limited upside

The 3 months correlation between Sparta and Capitol is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Capitol Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Series Trust 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 Capitol Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Series Trust has no effect on the direction of Sparta Capital i.e., Sparta Capital and Capitol Series go up and down completely randomly.

Pair Corralation between Sparta Capital and Capitol Series

If you would invest  2,988  in Capitol Series Trust on September 17, 2024 and sell it today you would earn a total of  7,192  from holding Capitol Series Trust or generate 240.7% return on investment over 90 days.

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

Sparta Capital  vs.  Capitol Series Trust

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. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Capitol Series Trust

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Series Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Capitol Series exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparta Capital and Capitol Series

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

The idea behind Sparta Capital and Capitol Series Trust 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.