Correlation Between Spark Networks and Alphabet

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

By analyzing existing cross correlation between Spark Networks SE and Alphabet Inc Class A, you can compare the effects of market volatilities on Spark Networks and Alphabet 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 Spark Networks with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spark Networks and Alphabet.

Diversification Opportunities for Spark Networks and Alphabet

-0.63

Correlation Coefficient

Spark Networks  Alphabet

Excellent diversification

The 3 months correlation between Spark and Alphabet is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Spark Networks SE and Alphabet Inc Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 SE are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of Spark Networks i.e., Spark Networks and Alphabet go up and down completely randomly.

Pair Corralation between Spark Networks and Alphabet

Considering the 90-day investment horizon Spark Networks SE is expected to under-perform the Alphabet. In addition to that, Spark Networks is 5.85 times more volatile than Alphabet Inc Class A. It trades about -0.05 of its total potential returns per unit of risk. Alphabet Inc Class A is currently generating about 0.04 per unit of volatility. If you would invest  11,658  in Alphabet Inc Class A on January 21, 2024 and sell it today you would earn a total of  3,751  from holding Alphabet Inc Class A or generate 32.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	77.82%
Values	Daily Returns

Spark Networks SE  vs.  Alphabet Inc Class A

Spark Networks SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alphabet Class A

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Alphabet may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Spark Networks and Alphabet

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

The idea behind Spark Networks SE and Alphabet Inc Class A 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .