Correlation Between Sprouts Farmers and Target
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers and Target 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 Sprouts Farmers and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Target, you can compare the effects of market volatilities on Sprouts Farmers and Target 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 Sprouts Farmers with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Target.
Diversification Opportunities for Sprouts Farmers and Target
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sprouts and Target is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Target go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Target
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 0.88 times more return on investment than Target. However, Sprouts Farmers Market is 1.14 times less risky than Target. It trades about 0.15 of its potential returns per unit of risk. Target is currently generating about 0.03 per unit of risk. If you would invest 3,502 in Sprouts Farmers Market on January 26, 2024 and sell it today you would earn a total of 3,057 from holding Sprouts Farmers Market or generate 87.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Target
Performance |
| Timeline |
| Sprouts Farmers Market |
| Target |
Sprouts Farmers and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Target
The main advantage of trading using opposite Sprouts Farmers and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Sprouts Farmers vs. Tesco PLC | Sprouts Farmers vs. Casino Guichard Perrachon | Sprouts Farmers vs. Kesko Oyj ADR |
| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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