Correlation Between Sparinvest Emerging and Sparinvest Europa

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

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

Diversification Opportunities for Sparinvest Emerging and Sparinvest Europa

0.0

Correlation Coefficient

Sparinvest Emerging  Sparinvest Europa

Pay attention - limited upside

The 3 months correlation between Sparinvest and Sparinvest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Emerging and Sparinvest Europa Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Europa Growth and Sparinvest Emerging 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 Sparinvest Emerging are associated (or correlated) with Sparinvest Europa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Europa Growth has no effect on the direction of Sparinvest Emerging i.e., Sparinvest Emerging and Sparinvest Europa go up and down completely randomly.

Pair Corralation between Sparinvest Emerging and Sparinvest Europa

If you would invest  16,036  in Sparinvest Europa Growth on September 11, 2024 and sell it today you would earn a total of  389.00  from holding Sparinvest Europa Growth or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sparinvest Emerging  vs.  Sparinvest Europa Growth

Sparinvest Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparinvest Emerging has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent forward indicators, Sparinvest Emerging is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Sparinvest Europa Growth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest Europa Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent basic indicators, Sparinvest Europa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sparinvest Emerging and Sparinvest Europa

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

The idea behind Sparinvest Emerging and Sparinvest Europa Growth 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.