Correlation Between Sparinvest INDEX and Sparinvest Emerging

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

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

Diversification Opportunities for Sparinvest INDEX and Sparinvest Emerging

0.0

Correlation Coefficient

Sparinvest INDEX  Sparinvest Emerging

Pay attention - limited upside

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

Pair Corralation between Sparinvest INDEX and Sparinvest Emerging

If you would invest  12,315  in Sparinvest INDEX Hj on September 13, 2024 and sell it today you would earn a total of  950.00  from holding Sparinvest INDEX Hj or generate 7.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sparinvest INDEX Hj  vs.  Sparinvest Emerging

Sparinvest INDEX

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Hj are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite quite weak technical indicators, Sparinvest INDEX may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sparinvest Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparinvest Emerging has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent forward indicators, Sparinvest Emerging is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sparinvest INDEX and Sparinvest Emerging

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

The idea behind Sparinvest INDEX Hj and Sparinvest Emerging 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.