Correlation Between Spire Global and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both Spire Global and NexGen Energy 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 NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and NexGen Energy, you can compare the effects of market volatilities on Spire Global and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and NexGen Energy.
Diversification Opportunities for Spire Global and NexGen Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and NexGen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Spire Global i.e., Spire Global and NexGen Energy go up and down completely randomly.
Pair Corralation between Spire Global and NexGen Energy
Given the investment horizon of 90 days Spire Global is expected to generate 1.56 times more return on investment than NexGen Energy. However, Spire Global is 1.56 times more volatile than NexGen Energy. It trades about 0.05 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.06 per unit of risk. If you would invest 960.00 in Spire Global on September 5, 2024 and sell it today you would earn a total of 517.00 from holding Spire Global or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.21% |
| Values | Daily Returns |
Spire Global vs. NexGen Energy
Performance |
| Timeline |
| Spire Global |
| NexGen Energy |
Spire Global and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Global and NexGen Energy
The main advantage of trading using opposite Spire Global and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
| NexGen Energy vs. Texas Roadhouse | NexGen Energy vs. Fukuyama Transporting Co | NexGen Energy vs. Gaztransport Technigaz SA | NexGen Energy vs. Lion One Metals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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