Correlation Between Spire Global and Origin Energy

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

By analyzing existing cross correlation between Spire Global and Origin Energy Ltd, you can compare the effects of market volatilities on Spire Global and Origin Energy 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 Origin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Origin Energy.

Diversification Opportunities for Spire Global and Origin Energy

0.43

Correlation Coefficient

Spire Global  Origin Energy

Very weak diversification

The 3 months correlation between Spire and Origin is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Origin Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Energy 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 Origin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Energy has no effect on the direction of Spire Global i.e., Spire Global and Origin Energy go up and down completely randomly.

Pair Corralation between Spire Global and Origin Energy

Given the investment horizon of 90 days Spire Global is expected to generate 2.29 times more return on investment than Origin Energy. However, Spire Global is 2.29 times more volatile than Origin Energy Ltd. It trades about 0.08 of its potential returns per unit of risk. Origin Energy Ltd is currently generating about 0.04 per unit of risk. If you would invest  560.00  in Spire Global on September 12, 2024 and sell it today you would earn a total of  856.00  from holding Spire Global or generate 152.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	87.5%
Values	Daily Returns

Spire Global  vs.  Origin Energy Ltd

Spire Global

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Origin Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Energy Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Origin Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spire Global and Origin Energy

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

The idea behind Spire Global and Origin Energy Ltd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.