Correlation Between Spire Global and Madison Core

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

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

Diversification Opportunities for Spire Global and Madison Core

-0.51

Correlation Coefficient

Spire Global  Madison Core

Excellent diversification

The 3 months correlation between Spire and Madison is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Madison E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison E Bond 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 Madison Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison E Bond has no effect on the direction of Spire Global i.e., Spire Global and Madison Core go up and down completely randomly.

Pair Corralation between Spire Global and Madison Core

Given the investment horizon of 90 days Spire Global is expected to generate 15.64 times more return on investment than Madison Core. However, Spire Global is 15.64 times more volatile than Madison E Bond. It trades about 0.24 of its potential returns per unit of risk. Madison E Bond is currently generating about -0.08 per unit of risk. If you would invest  824.00  in Spire Global on September 5, 2024 and sell it today you would earn a total of  653.00  from holding Spire Global or generate 79.25% return on investment over 90 days.

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

Spire Global  vs.  Madison E Bond

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.

Madison E Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Madison E Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Madison Core 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 Madison Core

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

The idea behind Spire Global and Madison E Bond 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.