Correlation Between Sparinvest Europa and Sparinvest Value

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

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

Diversification Opportunities for Sparinvest Europa and Sparinvest Value

0.1

Correlation Coefficient

Sparinvest Europa  Sparinvest Value

Average diversification

The 3 months correlation between Sparinvest and Sparinvest is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Europa Growth and Sparinvest Value Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Value Emerging and Sparinvest Europa 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 Europa Growth are associated (or correlated) with Sparinvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Value Emerging has no effect on the direction of Sparinvest Europa i.e., Sparinvest Europa and Sparinvest Value go up and down completely randomly.

Pair Corralation between Sparinvest Europa and Sparinvest Value

Assuming the 90 days trading horizon Sparinvest Europa Growth is expected to under-perform the Sparinvest Value. In addition to that, Sparinvest Europa is 1.57 times more volatile than Sparinvest Value Emerging. It trades about -0.03 of its total potential returns per unit of risk. Sparinvest Value Emerging is currently generating about 0.0 per unit of volatility. If you would invest  14,205  in Sparinvest Value Emerging on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Sparinvest Value Emerging or generate 0.0% return on investment over 90 days.

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

Sparinvest Europa Growth  vs.  Sparinvest Value Emerging

Sparinvest Europa Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparinvest Europa Growth has generated negative risk-adjusted returns adding no value to fund investors. 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.

Sparinvest Value Emerging

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sparinvest Europa and Sparinvest Value

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

The idea behind Sparinvest Europa Growth and Sparinvest Value Emerging 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.