Correlation Between Spire Global and Brandes Emerging
Can any of the company-specific risk be diversified away by investing in both Spire Global and Brandes Emerging 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 Global and Brandes Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Brandes Emerging Markets, you can compare the effects of market volatilities on Spire Global and Brandes Emerging 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 Global with a short position of Brandes Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Brandes Emerging.
Diversification Opportunities for Spire Global and Brandes Emerging
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Spire and Brandes is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Brandes Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Emerging Markets and Spire Global 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 Global are associated (or correlated) with Brandes Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Emerging Markets has no effect on the direction of Spire Global i.e., Spire Global and Brandes Emerging go up and down completely randomly.
Pair Corralation between Spire Global and Brandes Emerging
Given the investment horizon of 90 days Spire Global is expected to generate 7.3 times more return on investment than Brandes Emerging. However, Spire Global is 7.3 times more volatile than Brandes Emerging Markets. It trades about 0.18 of its potential returns per unit of risk. Brandes Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 1,179 in Spire Global on September 13, 2024 and sell it today you would earn a total of 201.00 from holding Spire Global or generate 17.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Spire Global vs. Brandes Emerging Markets
Performance |
Timeline |
Spire Global |
Brandes Emerging Markets |
Spire Global and Brandes Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spire Global and Brandes Emerging
The main advantage of trading using opposite Spire Global and Brandes Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Brandes Emerging 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 Brandes Emerging will offset losses from the drop in Brandes Emerging's long position.Spire Global vs. Lichen China Limited | ||
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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