Correlation Between Sparta Capital and First Trust

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

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

Diversification Opportunities for Sparta Capital and First Trust

0.0

Correlation Coefficient

Sparta Capital  First Trust

Pay attention - limited upside

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

Pair Corralation between Sparta Capital and First Trust

If you would invest  11,820  in First Trust Equity on April 26, 2025 and sell it today you would earn a total of  3,059  from holding First Trust Equity or generate 25.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Sparta Capital  vs.  First Trust Equity

Sparta Capital

Risk-Adjusted Performance

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

First Trust Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Equity are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, First Trust showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparta Capital and First Trust

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

The idea behind Sparta Capital and First Trust Equity 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.