Correlation Between SPARTAN STORES and Superior Plus

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

By analyzing existing cross correlation between SPARTAN STORES and Superior Plus Corp, you can compare the effects of market volatilities on SPARTAN STORES and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and Superior Plus.

Diversification Opportunities for SPARTAN STORES and Superior Plus

0.6

Correlation Coefficient

SPARTAN STORES  Superior Plus

Poor diversification

The 3 months correlation between SPARTAN and Superior is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and Superior Plus go up and down completely randomly.

Pair Corralation between SPARTAN STORES and Superior Plus

Assuming the 90 days trading horizon SPARTAN STORES is expected to generate 0.69 times more return on investment than Superior Plus. However, SPARTAN STORES is 1.46 times less risky than Superior Plus. It trades about -0.01 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.05 per unit of risk. If you would invest  1,924  in SPARTAN STORES on September 16, 2024 and sell it today you would lose (54.00) from holding SPARTAN STORES or give up 2.81% of portfolio value over 90 days.

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

SPARTAN STORES  vs.  Superior Plus Corp

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 rather sound forward-looking indicators, SPARTAN STORES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 SPARTAN STORES and Superior Plus

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

The idea behind SPARTAN STORES and Superior Plus Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.