Correlation Between FirstEnergy and Spire
Can any of the company-specific risk be diversified away by investing in both FirstEnergy and Spire 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 FirstEnergy and Spire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstEnergy and Spire Inc, you can compare the effects of market volatilities on FirstEnergy and Spire 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 FirstEnergy with a short position of Spire. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstEnergy and Spire.
Diversification Opportunities for FirstEnergy and Spire
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FirstEnergy and Spire is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding FirstEnergy and Spire Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Inc and FirstEnergy 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 FirstEnergy are associated (or correlated) with Spire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Inc has no effect on the direction of FirstEnergy i.e., FirstEnergy and Spire go up and down completely randomly.
Pair Corralation between FirstEnergy and Spire
Allowing for the 90-day total investment horizon FirstEnergy is expected to generate 1.39 times less return on investment than Spire. But when comparing it to its historical volatility, FirstEnergy is 1.13 times less risky than Spire. It trades about 0.03 of its potential returns per unit of risk. Spire Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,238 in Spire Inc on August 30, 2024 and sell it today you would earn a total of 1,073 from holding Spire Inc or generate 17.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstEnergy vs. Spire Inc
Performance |
| Timeline |
| FirstEnergy |
| Spire Inc |
FirstEnergy and Spire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstEnergy and Spire
The main advantage of trading using opposite FirstEnergy and Spire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstEnergy position performs unexpectedly, Spire 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 will offset losses from the drop in Spire's long position.| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
| Spire vs. Northwest Natural Gas | Spire vs. Chesapeake Utilities | Spire vs. One Gas | Spire vs. NewJersey Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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