Correlation Between Sparx Technology and First National

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

By analyzing existing cross correlation between Sparx Technology and First National Financial, you can compare the effects of market volatilities on Sparx Technology and First National 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 Sparx Technology with a short position of First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and First National.

Diversification Opportunities for Sparx Technology and First National

0.85

Correlation Coefficient

Sparx Technology  First National

Very poor diversification

The 3 months correlation between Sparx and First is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial and Sparx Technology 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 Sparx Technology are associated (or correlated) with First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Sparx Technology i.e., Sparx Technology and First National go up and down completely randomly.

Pair Corralation between Sparx Technology and First National

Assuming the 90 days trading horizon Sparx Technology is expected to generate 0.93 times more return on investment than First National. However, Sparx Technology is 1.08 times less risky than First National. It trades about 0.3 of its potential returns per unit of risk. First National Financial is currently generating about 0.2 per unit of risk. If you would invest  2,460  in Sparx Technology on May 11, 2025 and sell it today you would earn a total of  1,007  from holding Sparx Technology or generate 40.93% return on investment over 90 days.

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

Sparx Technology  vs.  First National Financial

Sparx Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

First National Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First National Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, First National unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sparx Technology and First National

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

The idea behind Sparx Technology and First National Financial 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.