Correlation Between Spire Global and UST Inc

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

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

Diversification Opportunities for Spire Global and UST Inc

0.21

Correlation Coefficient

Spire Global  UST Inc

Modest diversification

The 3 months correlation between Spire and UST is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg 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 UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of Spire Global i.e., Spire Global and UST Inc go up and down completely randomly.

Pair Corralation between Spire Global and UST Inc

Given the investment horizon of 90 days Spire Global is expected to generate 6.07 times more return on investment than UST Inc. However, Spire Global is 6.07 times more volatile than Multi Units Luxembourg . It trades about 0.05 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.12 per unit of risk. If you would invest  632.00  in Spire Global on December 1, 2024 and sell it today you would earn a total of  509.00  from holding Spire Global or generate 80.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Spire Global  vs.  Multi Units Luxembourg

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.

Multi Units Luxembourg

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Units Luxembourg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UST Inc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spire Global and UST Inc

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

The idea behind Spire Global and Multi Units Luxembourg 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.