Correlation Between Spire and New Fortress
Can any of the company-specific risk be diversified away by investing in both Spire and New Fortress 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 and New Fortress into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Inc and New Fortress Energy, you can compare the effects of market volatilities on Spire and New Fortress 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 with a short position of New Fortress. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire and New Fortress.
Diversification Opportunities for Spire and New Fortress
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Spire and New is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Spire Inc and New Fortress Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Fortress Energy and Spire 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 Inc are associated (or correlated) with New Fortress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Fortress Energy has no effect on the direction of Spire i.e., Spire and New Fortress go up and down completely randomly.
Pair Corralation between Spire and New Fortress
Assuming the 90 days horizon Spire Inc is expected to generate 0.2 times more return on investment than New Fortress. However, Spire Inc is 4.94 times less risky than New Fortress. It trades about 0.05 of its potential returns per unit of risk. New Fortress Energy is currently generating about -0.07 per unit of risk. If you would invest 2,115 in Spire Inc on August 23, 2024 and sell it today you would earn a total of 354.00 from holding Spire Inc or generate 16.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Inc vs. New Fortress Energy
Performance |
| Timeline |
| Spire Inc |
| New Fortress Energy |
Spire and New Fortress Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire and New Fortress
The main advantage of trading using opposite Spire and New Fortress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire position performs unexpectedly, New Fortress 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 New Fortress will offset losses from the drop in New Fortress' long position.The idea behind Spire Inc and New Fortress Energy 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.| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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