Two Equities Correlation Analysis

This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.

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Can any of the company-specific risk be diversified away by investing in both Spark Networks and DOW at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Spark Networks and DOW into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Spark Networks and DOW

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Poor diversification

The 3 months correlation between Spark and DOW is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Spark Networks Inc and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and Spark Networks 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 Spark Networks are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Spark Networks i.e. Spark Networks and DOW go up and down completely randomly.

Pair Corralation between Spark Networks and DOW

Considering 30-days investment horizon, Spark Networks is expected to generate 1.91 times less return on investment than DOW. In addition to that, Spark Networks is 1.83 times more volatile than DOW. It trades about 0.02 of its total potential returns per unit of risk. DOW is currently generating about 0.07 per unit of volatility. If you would invest  2,385,102  in DOW on May 8, 2020 and sell it today you would earn a total of  325,996  from holding DOW or generate 13.67% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Spark Networks Inc  vs.  DOW

 Performance (%) 
 Predicted Return Density 
Check out your portfolio center. Please also try Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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