Correlation Between Sprout Social and Global Business

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

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

Diversification Opportunities for Sprout Social and Global Business

0.3

Correlation Coefficient

Sprout Social  Global Business

Weak diversification

The 3 months correlation between Sprout and Global is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Global Business Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Business Travel and Sprout Social 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 Sprout Social are associated (or correlated) with Global Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Business Travel has no effect on the direction of Sprout Social i.e., Sprout Social and Global Business go up and down completely randomly.

Pair Corralation between Sprout Social and Global Business

Considering the 90-day investment horizon Sprout Social is expected to under-perform the Global Business. In addition to that, Sprout Social is 2.0 times more volatile than Global Business Travel. It trades about -0.1 of its total potential returns per unit of risk. Global Business Travel is currently generating about -0.13 per unit of volatility. If you would invest  939.00  in Global Business Travel on November 28, 2024 and sell it today you would lose (86.00) from holding Global Business Travel or give up 9.16% of portfolio value over 90 days.

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

Sprout Social  vs.  Global Business Travel

Sprout Social

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprout Social has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Global Business Travel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Business Travel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sprout Social and Global Business

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

The idea behind Sprout Social and Global Business Travel 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.