Correlation Between SPARTAN STORES and FLOW TRADERS

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

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

Diversification Opportunities for SPARTAN STORES and FLOW TRADERS

0.0

Correlation Coefficient

SPARTAN STORES  FLOW TRADERS

Pay attention - limited upside

The 3 months correlation between SPARTAN and FLOW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of SPARTAN STORES i.e., SPARTAN STORES and FLOW TRADERS go up and down completely randomly.

Pair Corralation between SPARTAN STORES and FLOW TRADERS

Assuming the 90 days trading horizon SPARTAN STORES is expected to under-perform the FLOW TRADERS. In addition to that, SPARTAN STORES is 1.85 times more volatile than FLOW TRADERS LTD. It trades about -0.05 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.03 per unit of volatility. If you would invest  2,126  in FLOW TRADERS LTD on October 11, 2024 and sell it today you would earn a total of  46.00  from holding FLOW TRADERS LTD or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SPARTAN STORES  vs.  FLOW TRADERS LTD

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 fragile 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.

FLOW TRADERS LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FLOW TRADERS LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FLOW TRADERS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SPARTAN STORES and FLOW TRADERS

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

The idea behind SPARTAN STORES and FLOW TRADERS LTD 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.