Correlation Between One Gas and Spire

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

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

Diversification Opportunities for One Gas and Spire

0.92

Correlation Coefficient

One Gas  Spire

Almost no diversification

The 3 months correlation between One and Spire is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding One Gas and Spire Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Inc and One Gas 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 One Gas are associated (or correlated) with Spire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Inc has no effect on the direction of One Gas i.e., One Gas and Spire go up and down completely randomly.

Pair Corralation between One Gas and Spire

Considering the 90-day investment horizon One Gas is expected to generate 2.64 times less return on investment than Spire. But when comparing it to its historical volatility, One Gas is 1.06 times less risky than Spire. It trades about 0.07 of its potential returns per unit of risk. Spire Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,683  in Spire Inc on December 26, 2024 and sell it today you would earn a total of  995.00  from holding Spire Inc or generate 14.89% return on investment over 90 days.

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

One Gas  vs.  Spire Inc

One Gas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in One Gas are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, One Gas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Spire Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Spire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with One Gas and Spire

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

The idea behind One Gas and Spire Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.