Correlation Between Spire and Suburban Propane

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

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

Diversification Opportunities for Spire and Suburban Propane

0.39

Correlation Coefficient

Spire  Suburban Propane

Weak diversification

The 3 months correlation between Spire and Suburban is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Spire Inc and Suburban Propane Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suburban Propane Partners 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 Suburban Propane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suburban Propane Partners has no effect on the direction of Spire i.e., Spire and Suburban Propane go up and down completely randomly.

Pair Corralation between Spire and Suburban Propane

Allowing for the 90-day total investment horizon Spire Inc is expected to generate 0.69 times more return on investment than Suburban Propane. However, Spire Inc is 1.44 times less risky than Suburban Propane. It trades about 0.06 of its potential returns per unit of risk. Suburban Propane Partners is currently generating about 0.03 per unit of risk. If you would invest  5,549  in Spire Inc on October 14, 2024 and sell it today you would earn a total of  1,013  from holding Spire Inc or generate 18.26% return on investment over 90 days.

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

Spire Inc  vs.  Suburban Propane Partners

Spire Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Inc are ranked lower than 1 (%) 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.

Suburban Propane Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suburban Propane Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Suburban Propane is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Spire and Suburban Propane

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

The idea behind Spire Inc and Suburban Propane Partners 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .