Correlation Between SERI INDUSTRIAL and SPARTAN STORES

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

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

Diversification Opportunities for SERI INDUSTRIAL and SPARTAN STORES

0.01

Correlation Coefficient

SERI INDUSTRIAL  SPARTAN STORES

Significant diversification

The 3 months correlation between SERI and SPARTAN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and SPARTAN STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPARTAN STORES and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with SPARTAN STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPARTAN STORES has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and SPARTAN STORES go up and down completely randomly.

Pair Corralation between SERI INDUSTRIAL and SPARTAN STORES

Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the SPARTAN STORES. In addition to that, SERI INDUSTRIAL is 1.9 times more volatile than SPARTAN STORES. It trades about -0.08 of its total potential returns per unit of risk. SPARTAN STORES is currently generating about -0.01 per unit of volatility. If you would invest  1,917  in SPARTAN STORES on September 25, 2024 and sell it today you would lose (67.00) from holding SPARTAN STORES or give up 3.5% of portfolio value over 90 days.

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

SERI INDUSTRIAL EO  vs.  SPARTAN STORES

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with SERI INDUSTRIAL and SPARTAN STORES

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

The idea behind SERI INDUSTRIAL EO and SPARTAN STORES 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.