Correlation Between Canadian Pacific and Spire Global

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

By analyzing existing cross correlation between Canadian Pacific Railway and Spire Global, you can compare the effects of market volatilities on Canadian Pacific and Spire Global 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 Canadian Pacific with a short position of Spire Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Spire Global.

Diversification Opportunities for Canadian Pacific and Spire Global

0.38

Correlation Coefficient

Canadian Pacific  Spire Global

Weak diversification

The 3 months correlation between Canadian and Spire is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and Spire Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Global and Canadian Pacific 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 Canadian Pacific Railway are associated (or correlated) with Spire Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Global has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and Spire Global go up and down completely randomly.

Pair Corralation between Canadian Pacific and Spire Global

Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to generate 0.22 times more return on investment than Spire Global. However, Canadian Pacific Railway is 4.6 times less risky than Spire Global. It trades about 0.03 of its potential returns per unit of risk. Spire Global is currently generating about -0.05 per unit of risk. If you would invest  7,196  in Canadian Pacific Railway on December 28, 2024 and sell it today you would earn a total of  132.00  from holding Canadian Pacific Railway or generate 1.83% return on investment over 90 days.

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

Canadian Pacific Railway  vs.  Spire Global

Canadian Pacific Railway

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Pacific Railway are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Canadian Pacific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Spire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Canadian Pacific and Spire Global

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

The idea behind Canadian Pacific Railway and Spire Global 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..