Correlation Between Sparinvest SICAV and Sparinvest Danske

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

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

Diversification Opportunities for Sparinvest SICAV and Sparinvest Danske

-0.79

Correlation Coefficient

Sparinvest SICAV  Sparinvest Danske

Pay attention - limited upside

The 3 months correlation between Sparinvest and Sparinvest is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest SICAV Procedo and Sparinvest Danske Aktier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Danske Aktier and Sparinvest SICAV 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 SICAV Procedo are associated (or correlated) with Sparinvest Danske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Danske Aktier has no effect on the direction of Sparinvest SICAV i.e., Sparinvest SICAV and Sparinvest Danske go up and down completely randomly.

Pair Corralation between Sparinvest SICAV and Sparinvest Danske

Assuming the 90 days trading horizon Sparinvest SICAV Procedo is expected to generate 0.59 times more return on investment than Sparinvest Danske. However, Sparinvest SICAV Procedo is 1.7 times less risky than Sparinvest Danske. It trades about 0.17 of its potential returns per unit of risk. Sparinvest Danske Aktier is currently generating about -0.15 per unit of risk. If you would invest  25,860  in Sparinvest SICAV Procedo on September 14, 2024 and sell it today you would earn a total of  1,310  from holding Sparinvest SICAV Procedo or generate 5.07% return on investment over 90 days.

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

Sparinvest SICAV Procedo  vs.  Sparinvest Danske Aktier

Sparinvest SICAV Procedo

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest SICAV Procedo are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Sparinvest SICAV is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Sparinvest Danske Aktier

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparinvest Danske Aktier has generated negative risk-adjusted returns adding no value to fund investors. Despite latest conflicting performance, the Fund's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the fund institutional investors.

Pair Trading with Sparinvest SICAV and Sparinvest Danske

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

The idea behind Sparinvest SICAV Procedo and Sparinvest Danske Aktier 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.