Correlation Between Sparta Capital and Presidio Property

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

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

Diversification Opportunities for Sparta Capital and Presidio Property

-0.28

Correlation Coefficient

Sparta Capital  Presidio Property

Very good diversification

The 3 months correlation between Sparta and Presidio is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property 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 Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of Sparta Capital i.e., Sparta Capital and Presidio Property go up and down completely randomly.

Pair Corralation between Sparta Capital and Presidio Property

Assuming the 90 days horizon Sparta Capital is expected to under-perform the Presidio Property. In addition to that, Sparta Capital is 13.89 times more volatile than Presidio Property Trust. It trades about -0.02 of its total potential returns per unit of risk. Presidio Property Trust is currently generating about 0.13 per unit of volatility. If you would invest  1,338  in Presidio Property Trust on December 23, 2024 and sell it today you would earn a total of  146.00  from holding Presidio Property Trust or generate 10.91% return on investment over 90 days.

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

Sparta Capital  vs.  Presidio Property Trust

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

Presidio Property Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Presidio Property Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Presidio Property may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sparta Capital and Presidio Property

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

The idea behind Sparta Capital and Presidio Property 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.