Correlation Between Spire Global and Guggenheim Market

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

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

Diversification Opportunities for Spire Global and Guggenheim Market

0.73

Correlation Coefficient

Spire Global  Guggenheim Market

Poor diversification

The 3 months correlation between Spire and Guggenheim is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Guggenheim Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Market Neutral 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 Guggenheim Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Market Neutral has no effect on the direction of Spire Global i.e., Spire Global and Guggenheim Market go up and down completely randomly.

Pair Corralation between Spire Global and Guggenheim Market

Given the investment horizon of 90 days Spire Global is expected to generate 36.44 times more return on investment than Guggenheim Market. However, Spire Global is 36.44 times more volatile than Guggenheim Market Neutral. It trades about 0.31 of its potential returns per unit of risk. Guggenheim Market Neutral is currently generating about -0.07 per unit of risk. If you would invest  1,091  in Spire Global on September 5, 2024 and sell it today you would earn a total of  386.00  from holding Spire Global or generate 35.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Spire Global  vs.  Guggenheim Market Neutral

Spire Global

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 18 (%) 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.

Guggenheim Market Neutral

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Market Neutral are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Guggenheim Market 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 Guggenheim Market

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

The idea behind Spire Global and Guggenheim Market Neutral 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.