Correlation Between Spire and Spirit Of

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

By analyzing existing cross correlation between Spire Inc and Spirit Of America, you can compare the effects of market volatilities on Spire and Spirit Of 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 with a short position of Spirit Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire and Spirit Of.

Diversification Opportunities for Spire and Spirit Of

0.66

Correlation Coefficient

Spire  Spirit Of

Poor diversification

The 3 months correlation between Spire and Spirit is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Spire Inc and Spirit Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Of America and Spire 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 Inc are associated (or correlated) with Spirit Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Of America has no effect on the direction of Spire i.e., Spire and Spirit Of go up and down completely randomly.

Pair Corralation between Spire and Spirit Of

Allowing for the 90-day total investment horizon Spire Inc is expected to generate 1.43 times more return on investment than Spirit Of. However, Spire is 1.43 times more volatile than Spirit Of America. It trades about 0.11 of its potential returns per unit of risk. Spirit Of America is currently generating about 0.13 per unit of risk. If you would invest  5,728  in Spire Inc on September 15, 2024 and sell it today you would earn a total of  1,042  from holding Spire Inc or generate 18.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Spire Inc  vs.  Spirit Of America

Spire Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Spire is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Spirit Of America

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spirit Of America are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Spirit Of 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 and Spirit Of

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

The idea behind Spire Inc and Spirit Of America 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..