Correlation Between Sparta Capital and Groupon

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

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

Diversification Opportunities for Sparta Capital and Groupon

-0.76

Correlation Coefficient

Sparta Capital  Groupon

Pay attention - limited upside

The 3 months correlation between Sparta and Groupon is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Groupon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupon 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 Groupon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupon has no effect on the direction of Sparta Capital i.e., Sparta Capital and Groupon go up and down completely randomly.

Pair Corralation between Sparta Capital and Groupon

Assuming the 90 days horizon Sparta Capital is expected to generate 5.46 times less return on investment than Groupon. In addition to that, Sparta Capital is 2.85 times more volatile than Groupon. It trades about 0.01 of its total potential returns per unit of risk. Groupon is currently generating about 0.14 per unit of volatility. If you would invest  1,208  in Groupon on December 29, 2024 and sell it today you would earn a total of  675.00  from holding Groupon or generate 55.88% return on investment over 90 days.

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

Sparta Capital  vs.  Groupon

Sparta Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Sparta Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Groupon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groupon are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groupon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparta Capital and Groupon

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

The idea behind Sparta Capital and Groupon 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.