Correlation Between Spire Global and ULTRA CLEAN

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

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

Diversification Opportunities for Spire Global and ULTRA CLEAN

0.29

Correlation Coefficient

Spire Global  ULTRA CLEAN

Modest diversification

The 3 months correlation between Spire and ULTRA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS 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 ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of Spire Global i.e., Spire Global and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between Spire Global and ULTRA CLEAN

Given the investment horizon of 90 days Spire Global is expected to generate 2.31 times more return on investment than ULTRA CLEAN. However, Spire Global is 2.31 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.0 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about -0.21 per unit of risk. If you would invest  1,449  in Spire Global on December 2, 2024 and sell it today you would lose (308.00) from holding Spire Global or give up 21.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.02%
Values	Daily Returns

Spire Global  vs.  ULTRA CLEAN HLDGS

Spire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Spire Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ULTRA CLEAN HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Spire Global and ULTRA CLEAN

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

The idea behind Spire Global and ULTRA CLEAN HLDGS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.