Correlation Between Spire Global and SPDR Barclays

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

By analyzing existing cross correlation between Spire Global and SPDR Barclays 3 5, you can compare the effects of market volatilities on Spire Global and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and SPDR Barclays.

Diversification Opportunities for Spire Global and SPDR Barclays

0.85

Correlation Coefficient

Spire Global  SPDR Barclays

Very poor diversification

The 3 months correlation between Spire and SPDR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and SPDR Barclays 3 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays 3 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 SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays 3 has no effect on the direction of Spire Global i.e., Spire Global and SPDR Barclays go up and down completely randomly.

Pair Corralation between Spire Global and SPDR Barclays

Given the investment horizon of 90 days Spire Global is expected to generate 12.0 times more return on investment than SPDR Barclays. However, Spire Global is 12.0 times more volatile than SPDR Barclays 3 5. It trades about 0.24 of its potential returns per unit of risk. SPDR Barclays 3 5 is currently generating about 0.17 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 Together
Strength	Strong
Accuracy	96.92%
Values	Daily Returns

Spire Global  vs.  SPDR Barclays 3 5

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.

SPDR Barclays 3

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Barclays 3 5 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spire Global and SPDR Barclays

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

The idea behind Spire Global and SPDR Barclays 3 5 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.