Correlation Between Spire and RGC Resources
Can any of the company-specific risk be diversified away by investing in both Spire and RGC Resources 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 RGC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Inc and RGC Resources, you can compare the effects of market volatilities on Spire and RGC Resources 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 RGC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire and RGC Resources.
Diversification Opportunities for Spire and RGC Resources
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spire and RGC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Spire Inc and RGC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RGC Resources 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 RGC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RGC Resources has no effect on the direction of Spire i.e., Spire and RGC Resources go up and down completely randomly.
Pair Corralation between Spire and RGC Resources
Assuming the 90 days horizon Spire Inc is expected to under-perform the RGC Resources. But the preferred stock apears to be less risky and, when comparing its historical volatility, Spire Inc is 7.25 times less risky than RGC Resources. The preferred stock trades about -0.09 of its potential returns per unit of risk. The RGC Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,034 in RGC Resources on September 2, 2024 and sell it today you would earn a total of 46.00 from holding RGC Resources or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spire Inc vs. RGC Resources
Performance |
| Timeline |
| Spire Inc |
| RGC Resources |
Spire and RGC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire and RGC Resources
The main advantage of trading using opposite Spire and RGC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire position performs unexpectedly, RGC Resources 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 RGC Resources will offset losses from the drop in RGC Resources' long position.The idea behind Spire Inc and RGC Resources 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.| RGC Resources vs. NewJersey Resources | RGC Resources vs. One Gas | RGC Resources vs. Northwest Natural Gas | RGC Resources vs. Chesapeake Utilities |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |