Correlation Between Spire Global and Cummins
Can any of the company-specific risk be diversified away by investing in both Spire Global and Cummins 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 Cummins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Cummins, you can compare the effects of market volatilities on Spire Global and Cummins 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 Cummins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Cummins.
Diversification Opportunities for Spire Global and Cummins
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Spire and Cummins is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Cummins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cummins 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 Cummins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cummins has no effect on the direction of Spire Global i.e., Spire Global and Cummins go up and down completely randomly.
Pair Corralation between Spire Global and Cummins
Given the investment horizon of 90 days Spire Global is expected to generate 4.37 times more return on investment than Cummins. However, Spire Global is 4.37 times more volatile than Cummins. It trades about 0.09 of its potential returns per unit of risk. Cummins is currently generating about 0.29 per unit of risk. If you would invest 1,105 in Spire Global on September 5, 2024 and sell it today you would earn a total of 372.00 from holding Spire Global or generate 33.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.7% |
| Values | Daily Returns |
Spire Global vs. Cummins
Performance |
| Timeline |
| Spire Global |
| Cummins |
Spire Global and Cummins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Global and Cummins
The main advantage of trading using opposite Spire Global and Cummins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Cummins 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 Cummins will offset losses from the drop in Cummins' long position.| Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
| Cummins vs. NetSol Technologies | Cummins vs. Digilife Technologies Limited | Cummins vs. FARO Technologies | Cummins vs. THORNEY TECHS LTD |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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