Correlation Between Spire Healthcare and Virgin Wines
Can any of the company-specific risk be diversified away by investing in both Spire Healthcare and Virgin Wines 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 Virgin Wines 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 Virgin Wines UK, you can compare the effects of market volatilities on Spire Healthcare and Virgin Wines 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 Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Healthcare and Virgin Wines.
Diversification Opportunities for Spire Healthcare and Virgin Wines
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Spire and Virgin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Spire Healthcare Group and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK 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 Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of Spire Healthcare i.e., Spire Healthcare and Virgin Wines go up and down completely randomly.
Pair Corralation between Spire Healthcare and Virgin Wines
Assuming the 90 days trading horizon Spire Healthcare Group is expected to under-perform the Virgin Wines. But the stock apears to be less risky and, when comparing its historical volatility, Spire Healthcare Group is 2.05 times less risky than Virgin Wines. The stock trades about -0.01 of its potential returns per unit of risk. The Virgin Wines UK is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,600 in Virgin Wines UK on August 31, 2024 and sell it today you would lose (50.00) from holding Virgin Wines UK or give up 1.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Healthcare Group vs. Virgin Wines UK
Performance |
| Timeline |
| Spire Healthcare |
| Virgin Wines UK |
Spire Healthcare and Virgin Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Healthcare and Virgin Wines
The main advantage of trading using opposite Spire Healthcare and Virgin Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Healthcare position performs unexpectedly, Virgin Wines 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 Virgin Wines will offset losses from the drop in Virgin Wines' long position.| Spire Healthcare vs. International Consolidated Airlines | Spire Healthcare vs. JB Hunt Transport | Spire Healthcare vs. DXC Technology Co | Spire Healthcare vs. Uber Technologies |
| Virgin Wines vs. Quadrise Plc | Virgin Wines vs. ImmuPharma PLC | Virgin Wines vs. Intuitive Investments Group | Virgin Wines vs. European Metals Holdings |
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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