Correlation Between Sparta Capital and Large Cap

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

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

Diversification Opportunities for Sparta Capital and Large Cap

0.0

Correlation Coefficient

Sparta Capital  Large Cap

Pay attention - limited upside

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

Pair Corralation between Sparta Capital and Large Cap

If you would invest  1,951  in Large Cap E on May 2, 2025 and sell it today you would earn a total of  119.00  from holding Large Cap E or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Sparta Capital  vs.  Large Cap E

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.

Large Cap E

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap E are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Large Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sparta Capital and Large Cap

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

The idea behind Sparta Capital and Large Cap E 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.