Correlation Between SP Plus and CRA International

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

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

Diversification Opportunities for SP Plus and CRA International

0.22

Correlation Coefficient

SP Plus  CRA International

Modest diversification

The 3 months correlation between SP Plus and CRA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SP Plus Corp and CRA International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRA International and SP Plus 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 SP Plus Corp are associated (or correlated) with CRA International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRA International has no effect on the direction of SP Plus i.e., SP Plus and CRA International go up and down completely randomly.

Pair Corralation between SP Plus and CRA International

Allowing for the 90-day total investment horizon SP Plus is expected to generate 1.02 times less return on investment than CRA International. In addition to that, SP Plus is 1.0 times more volatile than CRA International. It trades about 0.39 of its total potential returns per unit of risk. CRA International is currently generating about 0.4 per unit of volatility. If you would invest  16,035  in CRA International on March 7, 2024 and sell it today you would earn a total of  2,004  from holding CRA International or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	40.91%
Values	Daily Returns

SP Plus Corp  vs.  CRA International

SP Plus Corp

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days SP Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SP Plus is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

CRA International

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CRA International are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CRA International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SP Plus and CRA International

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

The idea behind SP Plus Corp and CRA International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.