Correlation Between Spire Global and Cloetta AB

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

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

Diversification Opportunities for Spire Global and Cloetta AB

0.44

Correlation Coefficient

Spire Global  Cloetta AB

Very weak diversification

The 3 months correlation between Spire and Cloetta is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Cloetta AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloetta AB 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 Cloetta AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloetta AB has no effect on the direction of Spire Global i.e., Spire Global and Cloetta AB go up and down completely randomly.

Pair Corralation between Spire Global and Cloetta AB

Given the investment horizon of 90 days Spire Global is expected to generate 2.7 times more return on investment than Cloetta AB. However, Spire Global is 2.7 times more volatile than Cloetta AB. It trades about 0.27 of its potential returns per unit of risk. Cloetta AB is currently generating about 0.13 per unit of risk. If you would invest  830.00  in Spire Global on September 3, 2024 and sell it today you would earn a total of  804.00  from holding Spire Global or generate 96.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Spire Global  vs.  Cloetta AB

Spire Global

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 21 (%) 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.

Cloetta AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cloetta AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cloetta AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Global and Cloetta AB

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

The idea behind Spire Global and Cloetta AB 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.