Correlation Between RGC Resources and Spire

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

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

Diversification Opportunities for RGC Resources and Spire

0.01

Correlation Coefficient

RGC Resources  Spire

Significant diversification

The 3 months correlation between RGC and Spire is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding RGC Resources and Spire Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Inc and RGC Resources 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 RGC Resources 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 RGC Resources i.e., RGC Resources and Spire go up and down completely randomly.

Pair Corralation between RGC Resources and Spire

Given the investment horizon of 90 days RGC Resources is expected to generate 1.72 times more return on investment than Spire. However, RGC Resources is 1.72 times more volatile than Spire Inc. It trades about 0.01 of its potential returns per unit of risk. Spire Inc is currently generating about 0.02 per unit of risk. If you would invest  1,999  in RGC Resources on September 19, 2024 and sell it today you would earn a total of  89.00  from holding RGC Resources or generate 4.45% return on investment over 90 days.

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

RGC Resources  vs.  Spire Inc

RGC Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RGC Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Spire Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RGC Resources and Spire

The main advantage of trading using opposite RGC Resources and Spire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RGC Resources 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 RGC Resources 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.