Correlation Between Sparta Capital and Pinnacle Sherman

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

By analyzing existing cross correlation between Sparta Capital and Pinnacle Sherman Multi Strategy, you can compare the effects of market volatilities on Sparta Capital and Pinnacle Sherman 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 Pinnacle Sherman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Pinnacle Sherman.

Diversification Opportunities for Sparta Capital and Pinnacle Sherman

0.89

Correlation Coefficient

Sparta Capital  Pinnacle Sherman

Very poor diversification

The 3 months correlation between Sparta and Pinnacle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Pinnacle Sherman Multi Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Sherman Multi 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 Pinnacle Sherman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Sherman Multi has no effect on the direction of Sparta Capital i.e., Sparta Capital and Pinnacle Sherman go up and down completely randomly.

Pair Corralation between Sparta Capital and Pinnacle Sherman

If you would invest  2.20  in Sparta Capital on March 18, 2024 and sell it today you would earn a total of  0.00  from holding Sparta Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	0.97%
Values	Daily Returns

Sparta Capital  vs.  Pinnacle Sherman Multi Strateg

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 nearly stable basic indicators, Sparta Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pinnacle Sherman Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinnacle Sherman Multi Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Sparta Capital and Pinnacle Sherman

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

The idea behind Sparta Capital and Pinnacle Sherman Multi Strategy 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.