Correlation Between Spire Global and Ariel International

Can any of the company-specific risk be diversified away by investing in both Spire Global and Ariel International 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 Ariel International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spire Global and Ariel International Fund, you can compare the effects of market volatilities on Spire Global and Ariel International 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 Ariel International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Ariel International.

Diversification Opportunities for Spire Global and Ariel International

-0.71

Correlation Coefficient

Spire Global  Ariel International

Pay attention - limited upside

The 3 months correlation between Spire and Ariel is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Ariel International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel International 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 Ariel International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel International has no effect on the direction of Spire Global i.e., Spire Global and Ariel International go up and down completely randomly.

Pair Corralation between Spire Global and Ariel International

Given the investment horizon of 90 days Spire Global is expected to generate 5.33 times more return on investment than Ariel International. However, Spire Global is 5.33 times more volatile than Ariel International Fund. It trades about 0.21 of its potential returns per unit of risk. Ariel International Fund is currently generating about -0.02 per unit of risk. If you would invest  856.00  in Spire Global on September 12, 2024 and sell it today you would earn a total of  560.00  from holding Spire Global or generate 65.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Spire Global  vs.  Ariel International Fund

Spire Global

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Ariel International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ariel International Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ariel International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spire Global and Ariel International

The main advantage of trading using opposite Spire Global and Ariel International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Ariel International 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 Ariel International will offset losses from the drop in Ariel International's long position.

The idea behind Spire Global and Ariel International Fund 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.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.