Correlation Between Spire Healthcare and Ecofin Global

Can any of the company-specific risk be diversified away by investing in both Spire Healthcare and Ecofin 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 Spire Healthcare and Ecofin Global 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 Ecofin Global Utilities, you can compare the effects of market volatilities on Spire Healthcare and Ecofin 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 Spire Healthcare with a short position of Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Ecofin Global.

Diversification Opportunities for Spire Healthcare and Ecofin Global

0.14

Correlation Coefficient

Spire Healthcare  Ecofin Global

Average diversification

The 3 months correlation between Spire and Ecofin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities 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 Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Ecofin Global go up and down completely randomly.

Pair Corralation between Spire Healthcare and Ecofin Global

Assuming the 90 days trading horizon Spire Healthcare Group is expected to generate 0.72 times more return on investment than Ecofin Global. However, Spire Healthcare Group is 1.38 times less risky than Ecofin Global. It trades about 0.09 of its potential returns per unit of risk. Ecofin Global Utilities is currently generating about 0.01 per unit of risk. If you would invest  21,500  in Spire Healthcare Group on October 6, 2024 and sell it today you would earn a total of  900.00  from holding Spire Healthcare Group or generate 4.19% return on investment over 90 days.

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

Spire Healthcare Group  vs.  Ecofin Global Utilities

Spire Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spire Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Spire Healthcare is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ecofin Global Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecofin Global Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Ecofin Global is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spire Healthcare and Ecofin Global

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

The idea behind Spire Healthcare Group and Ecofin Global Utilities 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.