Correlation Between Spire Global and American Beacon
Can any of the company-specific risk be diversified away by investing in both Spire Global and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and American Beacon Shapiro, you can compare the effects of market volatilities on Spire Global and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and American Beacon.
Diversification Opportunities for Spire Global and American Beacon
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and American Beacon Shapiro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Shapiro 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Shapiro has no effect on the direction of Spire Global i.e., Spire Global and American Beacon go up and down completely randomly.
Pair Corralation between Spire Global and American Beacon
Given the investment horizon of 90 days Spire Global is expected to generate 7.01 times more return on investment than American Beacon. However, Spire Global is 7.01 times more volatile than American Beacon Shapiro. It trades about 0.21 of its potential returns per unit of risk. American Beacon Shapiro is currently generating about -0.15 per unit of risk. If you would invest 1,150 in Spire Global on September 12, 2024 and sell it today you would earn a total of 240.50 from holding Spire Global or generate 20.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Global vs. American Beacon Shapiro
Performance |
| Timeline |
| Spire Global |
| American Beacon Shapiro |
Spire Global and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire Global and American Beacon
The main advantage of trading using opposite Spire Global and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
| American Beacon vs. Fidelity Advisor Diversified | American Beacon vs. Federated Hermes Conservative | American Beacon vs. Guggenheim Diversified Income | American Beacon vs. Aqr Diversified Arbitrage |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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