Correlation Between SPORTING and SPARTAN STORES

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

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

Diversification Opportunities for SPORTING and SPARTAN STORES

0.26

Correlation Coefficient

SPORTING  SPARTAN STORES

Modest diversification

The 3 months correlation between SPORTING and SPARTAN is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and SPORTING 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 SPORTING are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of SPORTING i.e., SPORTING and SPARTAN STORES go up and down completely randomly.

Pair Corralation between SPORTING and SPARTAN STORES

Assuming the 90 days trading horizon SPORTING is expected to generate 1.03 times more return on investment than SPARTAN STORES. However, SPORTING is 1.03 times more volatile than SPARTAN STORES. It trades about 0.13 of its potential returns per unit of risk. SPARTAN STORES is currently generating about 0.07 per unit of risk. If you would invest  81.00  in SPORTING on December 30, 2024 and sell it today you would earn a total of  15.00  from holding SPORTING or generate 18.52% return on investment over 90 days.

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

SPORTING  vs.  SPARTAN STORES

SPORTING

Risk-Adjusted Performance

OK

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

SPARTAN STORES

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPARTAN STORES are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking indicators, SPARTAN STORES may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SPORTING and SPARTAN STORES

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

The idea behind SPORTING and SPARTAN STORES 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.