Correlation Between SPARTAN STORES and Pandora AS

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

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

Diversification Opportunities for SPARTAN STORES and Pandora AS

-0.47

Correlation Coefficient

SPARTAN STORES  Pandora AS

Very good diversification

The 3 months correlation between SPARTAN and Pandora is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS and SPARTAN STORES 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 STORES are associated (or correlated) with Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and Pandora AS go up and down completely randomly.

Pair Corralation between SPARTAN STORES and Pandora AS

Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the Pandora AS. In addition to that, SPARTAN STORES is 1.27 times more volatile than Pandora AS. It trades about -0.06 of its total potential returns per unit of risk. Pandora AS is currently generating about 0.21 per unit of volatility. If you would invest  14,020  in Pandora AS on October 25, 2024 and sell it today you would earn a total of  3,610  from holding Pandora AS or generate 25.75% return on investment over 90 days.

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

SPARTAN STORES  vs.  Pandora AS

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPARTAN STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward-looking indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pandora AS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pandora AS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPARTAN STORES and Pandora AS

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

The idea behind SPARTAN STORES and Pandora AS 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.