Correlation Between Spire Healthcare and Endo International

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

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

Diversification Opportunities for Spire Healthcare and Endo International

-0.31

Correlation Coefficient

Spire Healthcare  Endo International

Very good diversification

The 3 months correlation between Spire and Endo is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Endo International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endo International PLC and Spire Healthcare 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 Spire Healthcare Group are associated (or correlated) with Endo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endo International PLC has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Endo International go up and down completely randomly.

Pair Corralation between Spire Healthcare and Endo International

Assuming the 90 days trading horizon Spire Healthcare is expected to generate 1.1 times less return on investment than Endo International. In addition to that, Spire Healthcare is 1.62 times more volatile than Endo International PLC. It trades about 0.21 of its total potential returns per unit of risk. Endo International PLC is currently generating about 0.38 per unit of volatility. If you would invest  59,763  in Endo International PLC on October 24, 2024 and sell it today you would earn a total of  3,779  from holding Endo International PLC or generate 6.32% return on investment over 90 days.

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

Spire Healthcare Group  vs.  Endo International PLC

Spire Healthcare

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Healthcare Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Spire Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Endo International PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endo International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Endo International is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Spire Healthcare and Endo International

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

The idea behind Spire Healthcare Group and Endo International PLC 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..