Correlation Between Ecclesiastical Insurance and Spire Healthcare
Can any of the company-specific risk be diversified away by investing in both Ecclesiastical Insurance and Spire Healthcare 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 Ecclesiastical Insurance and Spire Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecclesiastical Insurance Office and Spire Healthcare Group, you can compare the effects of market volatilities on Ecclesiastical Insurance and Spire Healthcare 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 Ecclesiastical Insurance with a short position of Spire Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecclesiastical Insurance and Spire Healthcare.
Diversification Opportunities for Ecclesiastical Insurance and Spire Healthcare
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ecclesiastical and Spire is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ecclesiastical Insurance Offic and Spire Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Healthcare and Ecclesiastical Insurance 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 Ecclesiastical Insurance Office are associated (or correlated) with Spire Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Healthcare has no effect on the direction of Ecclesiastical Insurance i.e., Ecclesiastical Insurance and Spire Healthcare go up and down completely randomly.
Pair Corralation between Ecclesiastical Insurance and Spire Healthcare
Assuming the 90 days trading horizon Ecclesiastical Insurance Office is expected to under-perform the Spire Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Ecclesiastical Insurance Office is 1.67 times less risky than Spire Healthcare. The stock trades about -0.1 of its potential returns per unit of risk. The Spire Healthcare Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 22,800 in Spire Healthcare Group on November 3, 2024 and sell it today you would earn a total of 600.00 from holding Spire Healthcare Group or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecclesiastical Insurance Offic vs. Spire Healthcare Group
Performance |
| Timeline |
| Ecclesiastical Insurance |
| Spire Healthcare |
Ecclesiastical Insurance and Spire Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecclesiastical Insurance and Spire Healthcare
The main advantage of trading using opposite Ecclesiastical Insurance and Spire Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecclesiastical Insurance position performs unexpectedly, Spire Healthcare 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 Spire Healthcare will offset losses from the drop in Spire Healthcare's long position.The idea behind Ecclesiastical Insurance Office and Spire Healthcare Group 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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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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