Correlation Between Spire Healthcare and M Winkworth

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

Diversification Opportunities for Spire Healthcare and M Winkworth

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Spire and WINK is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and M Winkworth PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Winkworth 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 M Winkworth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Winkworth PLC has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and M Winkworth go up and down completely randomly.

Pair Corralation between Spire Healthcare and M Winkworth

Assuming the 90 days trading horizon Spire Healthcare is expected to generate 1.82 times less return on investment than M Winkworth. In addition to that, Spire Healthcare is 2.1 times more volatile than M Winkworth PLC. It trades about 0.06 of its total potential returns per unit of risk. M Winkworth PLC is currently generating about 0.23 per unit of volatility. If you would invest  19,100  in M Winkworth PLC on October 11, 2024 and sell it today you would earn a total of  400.00  from holding M Winkworth PLC or generate 2.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.0%
ValuesDaily Returns

Spire Healthcare Group  vs.  M Winkworth PLC

 Performance 
       Timeline  
Spire Healthcare 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
M Winkworth PLC 

Risk-Adjusted Performance

0 of 100

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

Spire Healthcare and M Winkworth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spire Healthcare and M Winkworth

The main advantage of trading using opposite Spire Healthcare and M Winkworth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Healthcare position performs unexpectedly, M Winkworth 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 M Winkworth will offset losses from the drop in M Winkworth's long position.
The idea behind Spire Healthcare Group and M Winkworth 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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