Correlation Between Spire Healthcare and Tritax Big

Can any of the company-specific risk be diversified away by investing in both Spire Healthcare and Tritax Big 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 Tritax Big 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 Tritax Big Box, you can compare the effects of market volatilities on Spire Healthcare and Tritax Big 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 Tritax Big. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Tritax Big.

Diversification Opportunities for Spire Healthcare and Tritax Big

-0.09

Correlation Coefficient

Spire Healthcare  Tritax Big

Good diversification

The 3 months correlation between Spire and Tritax is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Tritax Big Box in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tritax Big Box 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 Tritax Big. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tritax Big Box has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Tritax Big go up and down completely randomly.

Pair Corralation between Spire Healthcare and Tritax Big

Assuming the 90 days trading horizon Spire Healthcare Group is expected to generate 0.77 times more return on investment than Tritax Big. However, Spire Healthcare Group is 1.29 times less risky than Tritax Big. It trades about 0.14 of its potential returns per unit of risk. Tritax Big Box is currently generating about 0.05 per unit of risk. If you would invest  21,850  in Spire Healthcare Group on October 26, 2024 and sell it today you would earn a total of  1,500  from holding Spire Healthcare Group or generate 6.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Spire Healthcare Group  vs.  Tritax Big Box

Spire Healthcare

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Healthcare Group are ranked lower than 5 (%) 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.

Tritax Big Box

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Spire Healthcare and Tritax Big

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

The idea behind Spire Healthcare Group and Tritax Big Box 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..