Correlation Between Spire and APA
Can any of the company-specific risk be diversified away by investing in both Spire and APA 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 APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Inc and APA Group, you can compare the effects of market volatilities on Spire and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire and APA.
Diversification Opportunities for Spire and APA
Good diversification
The 3 months correlation between Spire and APA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Spire Inc and APA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Group 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Group has no effect on the direction of Spire i.e., Spire and APA go up and down completely randomly.
Pair Corralation between Spire and APA
Allowing for the 90-day total investment horizon Spire Inc is expected to generate 0.27 times more return on investment than APA. However, Spire Inc is 3.67 times less risky than APA. It trades about 0.14 of its potential returns per unit of risk. APA Group is currently generating about 0.0 per unit of risk. If you would invest 6,370 in Spire Inc on November 8, 2024 and sell it today you would earn a total of 857.00 from holding Spire Inc or generate 13.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Spire Inc vs. APA Group
Performance |
| Timeline |
| Spire Inc |
| APA Group |
Spire and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spire and APA
The main advantage of trading using opposite Spire and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Spire vs. Northwest Natural Gas | Spire vs. Chesapeake Utilities | Spire vs. One Gas | Spire vs. NewJersey Resources |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Transaction History View history of all your transactions and understand their impact on performance |