Correlation Between Sparinvest INDEX and DSV Panalpina

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

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

Diversification Opportunities for Sparinvest INDEX and DSV Panalpina

-0.63

Correlation Coefficient

Sparinvest INDEX  DSV Panalpina

Excellent diversification

The 3 months correlation between Sparinvest and DSV is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest INDEX Emerging and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS 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 Emerging are associated (or correlated) with DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of Sparinvest INDEX i.e., Sparinvest INDEX and DSV Panalpina go up and down completely randomly.

Pair Corralation between Sparinvest INDEX and DSV Panalpina

Assuming the 90 days trading horizon Sparinvest INDEX Emerging is expected to generate 0.41 times more return on investment than DSV Panalpina. However, Sparinvest INDEX Emerging is 2.43 times less risky than DSV Panalpina. It trades about 0.08 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about -0.01 per unit of risk. If you would invest  12,031  in Sparinvest INDEX Emerging on January 19, 2024 and sell it today you would earn a total of  819.00  from holding Sparinvest INDEX Emerging or generate 6.81% return on investment over 90 days.

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

Sparinvest INDEX Emerging  vs.  DSV Panalpina AS

Sparinvest INDEX Emerging

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Emerging are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent primary indicators, Sparinvest INDEX is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

DSV Panalpina AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSV Panalpina AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Sparinvest INDEX and DSV Panalpina

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

The idea behind Sparinvest INDEX Emerging and DSV Panalpina AS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.