Correlation Between SPARTAN STORES and Axfood AB

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

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

Diversification Opportunities for SPARTAN STORES and Axfood AB

0.52

Correlation Coefficient

SPARTAN STORES  Axfood AB

Very weak diversification

The 3 months correlation between SPARTAN and Axfood is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and Axfood AB go up and down completely randomly.

Pair Corralation between SPARTAN STORES and Axfood AB

Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the Axfood AB. In addition to that, SPARTAN STORES is 1.64 times more volatile than Axfood AB. It trades about -0.06 of its total potential returns per unit of risk. Axfood AB is currently generating about 0.01 per unit of volatility. If you would invest  2,020  in Axfood AB on October 6, 2024 and sell it today you would earn a total of  1.00  from holding Axfood AB or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

SPARTAN STORES  vs.  Axfood AB

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.

Axfood AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axfood AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SPARTAN STORES and Axfood AB

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

The idea behind SPARTAN STORES and Axfood AB 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.