Correlation Between Spire Global and Columbia Select
Can any of the company-specific risk be diversified away by investing in both Spire Global and Columbia Select 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 Columbia Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spire Global and Columbia Select Large, you can compare the effects of market volatilities on Spire Global and Columbia Select 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 Columbia Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Columbia Select.
Diversification Opportunities for Spire Global and Columbia Select
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spire and Columbia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Columbia Select Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select Large 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 Columbia Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Select Large has no effect on the direction of Spire Global i.e., Spire Global and Columbia Select go up and down completely randomly.
Pair Corralation between Spire Global and Columbia Select
Given the investment horizon of 90 days Spire Global is expected to generate 7.17 times more return on investment than Columbia Select. However, Spire Global is 7.17 times more volatile than Columbia Select Large. It trades about 0.04 of its potential returns per unit of risk. Columbia Select Large is currently generating about 0.12 per unit of risk. If you would invest 1,064 in Spire Global on September 6, 2024 and sell it today you would earn a total of 434.00 from holding Spire Global or generate 40.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Spire Global vs. Columbia Select Large
Performance |
Timeline |
Spire Global |
Columbia Select Large |
Spire Global and Columbia Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spire Global and Columbia Select
The main advantage of trading using opposite Spire Global and Columbia Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, Columbia Select 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 Columbia Select will offset losses from the drop in Columbia Select's long position.Spire Global vs. Lichen China Limited | Spire Global vs. Unifirst | Spire Global vs. First Advantage Corp | Spire Global vs. Performant Financial |
Columbia Select vs. Columbia Large Cap | Columbia Select vs. Columbia Small Cap | Columbia Select vs. Columbia Large Cap | Columbia Select vs. Columbia Mid Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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