Correlation Between Spire Global and Azimut Holding

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

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

Diversification Opportunities for Spire Global and Azimut Holding

0.05

Correlation Coefficient

Spire Global  Azimut Holding

Significant diversification

The 3 months correlation between Spire and Azimut is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Azimut Holding SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Holding SpA 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 Azimut Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Holding SpA has no effect on the direction of Spire Global i.e., Spire Global and Azimut Holding go up and down completely randomly.

Pair Corralation between Spire Global and Azimut Holding

Given the investment horizon of 90 days Spire Global is expected to generate 1.41 times more return on investment than Azimut Holding. However, Spire Global is 1.41 times more volatile than Azimut Holding SpA. It trades about 0.21 of its potential returns per unit of risk. Azimut Holding SpA is currently generating about 0.09 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Spire Global  vs.  Azimut Holding SpA

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.

Azimut Holding SpA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Azimut Holding SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical indicators, Azimut Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Global and Azimut Holding

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

The idea behind Spire Global and Azimut Holding SpA 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.