Correlation Between Sparta Capital and Virtus Global

Can any of the company-specific risk be diversified away by investing in both Sparta Capital and Virtus Global 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 Sparta Capital and Virtus Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sparta Capital and Virtus Global Real, you can compare the effects of market volatilities on Sparta Capital and Virtus Global 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 Sparta Capital with a short position of Virtus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Virtus Global.

Diversification Opportunities for Sparta Capital and Virtus Global

0.41

Correlation Coefficient

Sparta Capital  Virtus Global

Very weak diversification

The 3 months correlation between Sparta and Virtus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Virtus Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Global Real and Sparta Capital 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 Sparta Capital are associated (or correlated) with Virtus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Global Real has no effect on the direction of Sparta Capital i.e., Sparta Capital and Virtus Global go up and down completely randomly.

Pair Corralation between Sparta Capital and Virtus Global

Assuming the 90 days horizon Sparta Capital is expected to under-perform the Virtus Global. In addition to that, Sparta Capital is 6.5 times more volatile than Virtus Global Real. It trades about -0.22 of its total potential returns per unit of risk. Virtus Global Real is currently generating about 0.22 per unit of volatility. If you would invest  3,600  in Virtus Global Real on September 2, 2024 and sell it today you would earn a total of  133.00  from holding Virtus Global Real or generate 3.69% return on investment over 90 days.

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

Sparta Capital  vs.  Virtus Global Real

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital 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 basic 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.

Virtus Global Real

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Global Real are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sparta Capital and Virtus Global

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

The idea behind Sparta Capital and Virtus Global Real 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.