Correlation Between Sparindex INDEX and Carnegie Wealth

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

By analyzing existing cross correlation between Sparindex INDEX Bredygtige and Carnegie Wealth Management, you can compare the effects of market volatilities on Sparindex INDEX and Carnegie Wealth 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 Sparindex INDEX with a short position of Carnegie Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparindex INDEX and Carnegie Wealth.

Diversification Opportunities for Sparindex INDEX and Carnegie Wealth

0.26

Correlation Coefficient

Sparindex INDEX  Carnegie Wealth

Modest diversification

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

Pair Corralation between Sparindex INDEX and Carnegie Wealth

Assuming the 90 days trading horizon Sparindex INDEX is expected to generate 6.59 times less return on investment than Carnegie Wealth. But when comparing it to its historical volatility, Sparindex INDEX Bredygtige is 1.19 times less risky than Carnegie Wealth. It trades about 0.01 of its potential returns per unit of risk. Carnegie Wealth Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12,460  in Carnegie Wealth Management on December 28, 2024 and sell it today you would earn a total of  360.00  from holding Carnegie Wealth Management or generate 2.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Sparindex INDEX Bredygtige  vs.  Carnegie Wealth Management

Sparindex INDEX Bred

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparindex INDEX Bredygtige has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Sparindex INDEX is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Carnegie Wealth Mana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Wealth Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Carnegie Wealth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sparindex INDEX and Carnegie Wealth

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

The idea behind Sparindex INDEX Bredygtige and Carnegie Wealth Management 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.