Correlation Between Spire Global and Coronation Top

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Can any of the company-specific risk be diversified away by investing in both Spire Global and Coronation Top 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 Global and Coronation Top into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Coronation Top 20, you can compare the effects of market volatilities on Spire Global and Coronation Top 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 Global with a short position of Coronation Top. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Coronation Top.

Diversification Opportunities for Spire Global and Coronation Top

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Spire and Coronation is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Coronation Top 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronation Top 20 and Spire Global 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 Global are associated (or correlated) with Coronation Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronation Top 20 has no effect on the direction of Spire Global i.e., Spire Global and Coronation Top go up and down completely randomly.

Pair Corralation between Spire Global and Coronation Top

Given the investment horizon of 90 days Spire Global is expected to generate 6.93 times more return on investment than Coronation Top. However, Spire Global is 6.93 times more volatile than Coronation Top 20. It trades about 0.11 of its potential returns per unit of risk. Coronation Top 20 is currently generating about 0.08 per unit of risk. If you would invest  414.00  in Spire Global on September 4, 2024 and sell it today you would earn a total of  1,143  from holding Spire Global or generate 276.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.66%
ValuesDaily Returns

Spire Global  vs.  Coronation Top 20

 Performance 
       Timeline  
Spire Global 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.
Coronation Top 20 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Top 20 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Coronation Top is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Spire Global and Coronation Top Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spire Global and Coronation Top

The main advantage of trading using opposite Spire Global and Coronation Top positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Coronation Top 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 Coronation Top will offset losses from the drop in Coronation Top's long position.
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The idea behind Spire Global and Coronation Top 20 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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