Correlation Between SPAR and Performant Financial

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

By analyzing existing cross correlation between SPAR Group and Performant Financial, you can compare the effects of market volatilities on SPAR and Performant Financial 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 SPAR with a short position of Performant Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPAR and Performant Financial.

Diversification Opportunities for SPAR and Performant Financial

0.33

Correlation Coefficient

SPAR  Performant Financial

Weak diversification

The 3 months correlation between SPAR and Performant is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SPAR Group and Performant Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performant Financial and SPAR 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 SPAR Group are associated (or correlated) with Performant Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performant Financial has no effect on the direction of SPAR i.e., SPAR and Performant Financial go up and down completely randomly.

Pair Corralation between SPAR and Performant Financial

Given the investment horizon of 90 days SPAR Group is expected to under-perform the Performant Financial. But the stock apears to be less risky and, when comparing its historical volatility, SPAR Group is 2.6 times less risky than Performant Financial. The stock trades about -0.09 of its potential returns per unit of risk. The Performant Financial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Performant Financial on September 1, 2024 and sell it today you would lose (26.00) from holding Performant Financial or give up 7.65% of portfolio value over 90 days.

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

SPAR Group  vs.  Performant Financial

SPAR Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPAR Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Performant Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPAR and Performant Financial

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

The idea behind SPAR Group and Performant Financial 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.