Correlation Between IDEX Metals and Sparx Technology

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

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

Diversification Opportunities for IDEX Metals and Sparx Technology

-0.34

Correlation Coefficient

IDEX Metals  Sparx Technology

Very good diversification

The 3 months correlation between IDEX and Sparx is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Metals Corp and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology and IDEX Metals 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 IDEX Metals Corp are associated (or correlated) with Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of IDEX Metals i.e., IDEX Metals and Sparx Technology go up and down completely randomly.

Pair Corralation between IDEX Metals and Sparx Technology

Assuming the 90 days trading horizon IDEX Metals Corp is expected to under-perform the Sparx Technology. In addition to that, IDEX Metals is 1.61 times more volatile than Sparx Technology. It trades about -0.01 of its total potential returns per unit of risk. Sparx Technology is currently generating about 0.43 per unit of volatility. If you would invest  1,826  in Sparx Technology on April 20, 2025 and sell it today you would earn a total of  1,265  from holding Sparx Technology or generate 69.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.16%
Values	Daily Returns

IDEX Metals Corp  vs.  Sparx Technology

IDEX Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDEX Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, IDEX Metals is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sparx Technology

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IDEX Metals and Sparx Technology

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

The idea behind IDEX Metals Corp and Sparx Technology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.