Correlation Between Spire Healthcare and Ashtead Technology
Can any of the company-specific risk be diversified away by investing in both Spire Healthcare and Ashtead Technology 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 Healthcare and Ashtead Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Healthcare Group and Ashtead Technology Holdings, you can compare the effects of market volatilities on Spire Healthcare and Ashtead Technology 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 Healthcare with a short position of Ashtead Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Ashtead Technology.
Diversification Opportunities for Spire Healthcare and Ashtead Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and Ashtead is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Ashtead Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Technology and Spire Healthcare 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 Healthcare Group are associated (or correlated) with Ashtead Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Technology has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Ashtead Technology go up and down completely randomly.
Pair Corralation between Spire Healthcare and Ashtead Technology
Assuming the 90 days trading horizon Spire Healthcare Group is expected to generate 0.59 times more return on investment than Ashtead Technology. However, Spire Healthcare Group is 1.69 times less risky than Ashtead Technology. It trades about 0.11 of its potential returns per unit of risk. Ashtead Technology Holdings is currently generating about -0.03 per unit of risk. If you would invest 21,850 in Spire Healthcare Group on September 24, 2024 and sell it today you would earn a total of 500.00 from holding Spire Healthcare Group or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Healthcare Group vs. Ashtead Technology Holdings
Performance |
| Timeline |
| Spire Healthcare |
| Ashtead Technology |
Spire Healthcare and Ashtead Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Healthcare and Ashtead Technology
The main advantage of trading using opposite Spire Healthcare and Ashtead Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Healthcare position performs unexpectedly, Ashtead Technology 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 Ashtead Technology will offset losses from the drop in Ashtead Technology's long position.| Spire Healthcare vs. Tungsten West PLC | Spire Healthcare vs. Argo Group Limited | Spire Healthcare vs. Hardide PLC | Spire Healthcare vs. Gfinity PLC |
| Ashtead Technology vs. Zoom Video Communications | Ashtead Technology vs. Enbridge | Ashtead Technology vs. Endo International PLC | Ashtead Technology vs. Rolls Royce Holdings PLC |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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