Correlation Between UGI and Spire
Can any of the company-specific risk be diversified away by investing in both UGI and Spire 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 UGI and Spire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UGI Corporation and Spire Inc, you can compare the effects of market volatilities on UGI and Spire 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 UGI with a short position of Spire. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI and Spire.
Diversification Opportunities for UGI and Spire
Poor diversification
The 3 months correlation between UGI and Spire is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp. and Spire Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Inc and UGI 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 UGI Corporation are associated (or correlated) with Spire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Inc has no effect on the direction of UGI i.e., UGI and Spire go up and down completely randomly.
Pair Corralation between UGI and Spire
Considering the 90-day investment horizon UGI Corporation is expected to generate 0.8 times more return on investment than Spire. However, UGI Corporation is 1.25 times less risky than Spire. It trades about 0.4 of its potential returns per unit of risk. Spire Inc is currently generating about 0.2 per unit of risk. If you would invest 2,849 in UGI Corporation on November 9, 2024 and sell it today you would earn a total of 352.00 from holding UGI Corporation or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UGI Corp. vs. Spire Inc
Performance |
| Timeline |
| UGI Corporation |
| Spire Inc |
UGI and Spire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UGI and Spire
The main advantage of trading using opposite UGI and Spire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UGI position performs unexpectedly, Spire 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 Spire will offset losses from the drop in Spire's long position.The idea behind UGI Corporation and Spire Inc 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.| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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