Correlation Between Spire Global and Smallcap
Can any of the company-specific risk be diversified away by investing in both Spire Global and Smallcap 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 Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Smallcap Sp 600, you can compare the effects of market volatilities on Spire Global and Smallcap 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 Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Smallcap.
Diversification Opportunities for Spire Global and Smallcap
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and Smallcap is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Smallcap Sp 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Sp 600 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 Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Sp 600 has no effect on the direction of Spire Global i.e., Spire Global and Smallcap go up and down completely randomly.
Pair Corralation between Spire Global and Smallcap
Given the investment horizon of 90 days Spire Global is expected to generate 4.32 times more return on investment than Smallcap. However, Spire Global is 4.32 times more volatile than Smallcap Sp 600. It trades about 0.04 of its potential returns per unit of risk. Smallcap Sp 600 is currently generating about 0.03 per unit of risk. If you would invest 1,016 in Spire Global on September 4, 2024 and sell it today you would earn a total of 541.00 from holding Spire Global or generate 53.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Spire Global vs. Smallcap Sp 600
Performance |
| Timeline |
| Spire Global |
| Smallcap Sp 600 |
Spire Global and Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Global and Smallcap
The main advantage of trading using opposite Spire Global and Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Smallcap 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 Smallcap will offset losses from the drop in Smallcap's long position.| Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
| Smallcap vs. Strategic Asset Management | Smallcap vs. Strategic Asset Management | Smallcap vs. Strategic Asset Management | Smallcap vs. Strategic Asset Management |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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