Correlation Between Spartan Delta and Journey Energy

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

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

Diversification Opportunities for Spartan Delta and Journey Energy

0.95

Correlation Coefficient

Spartan Delta  Journey Energy

Almost no diversification

The 3 months correlation between Spartan and Journey is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Spartan Delta Corp and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey Energy and Spartan Delta 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 Spartan Delta Corp are associated (or correlated) with Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Spartan Delta i.e., Spartan Delta and Journey Energy go up and down completely randomly.

Pair Corralation between Spartan Delta and Journey Energy

Assuming the 90 days trading horizon Spartan Delta Corp is expected to generate 0.8 times more return on investment than Journey Energy. However, Spartan Delta Corp is 1.26 times less risky than Journey Energy. It trades about -0.01 of its potential returns per unit of risk. Journey Energy is currently generating about -0.02 per unit of risk. If you would invest  333.00  in Spartan Delta Corp on December 30, 2024 and sell it today you would lose (10.00) from holding Spartan Delta Corp or give up 3.0% of portfolio value over 90 days.

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

Spartan Delta Corp  vs.  Journey Energy

Spartan Delta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spartan Delta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Spartan Delta is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Journey Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Journey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Journey Energy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Spartan Delta and Journey Energy

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

The idea behind Spartan Delta Corp and Journey Energy 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.