Correlation Between Sprout Social and Society Pass

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

By analyzing existing cross correlation between Sprout Social and Society Pass, you can compare the effects of market volatilities on Sprout Social and Society Pass 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 Sprout Social with a short position of Society Pass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprout Social and Society Pass.

Diversification Opportunities for Sprout Social and Society Pass

0.59

Correlation Coefficient

Sprout Social  Society Pass

Very weak diversification

The 3 months correlation between Sprout and Society is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Society Pass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Society Pass and Sprout Social 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 Sprout Social are associated (or correlated) with Society Pass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Society Pass has no effect on the direction of Sprout Social i.e., Sprout Social and Society Pass go up and down completely randomly.

Pair Corralation between Sprout Social and Society Pass

Considering the 90-day investment horizon Sprout Social is expected to generate 0.32 times more return on investment than Society Pass. However, Sprout Social is 3.17 times less risky than Society Pass. It trades about 0.01 of its potential returns per unit of risk. Society Pass is currently generating about -0.39 per unit of risk. If you would invest  3,305  in Sprout Social on March 28, 2024 and sell it today you would earn a total of  1.00  from holding Sprout Social or generate 0.03% return on investment over 90 days.

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

Sprout Social  vs.  Society Pass

Sprout Social

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprout Social has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Society Pass

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Society Pass has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sprout Social and Society Pass

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

The idea behind Sprout Social and Society Pass 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.