Correlation Between Spirax Sarco and Nordex SE

Can any of the company-specific risk be diversified away by investing in both Spirax Sarco and Nordex SE 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 Spirax Sarco and Nordex SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spirax Sarco Engineering PLC and Nordex SE, you can compare the effects of market volatilities on Spirax Sarco and Nordex SE 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 Spirax Sarco with a short position of Nordex SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirax Sarco and Nordex SE.

Diversification Opportunities for Spirax Sarco and Nordex SE

0.17

Correlation Coefficient

Spirax Sarco  Nordex SE

Average diversification

The 3 months correlation between Spirax and Nordex is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Spirax Sarco Engineering PLC and Nordex SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordex SE and Spirax Sarco 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 Spirax Sarco Engineering PLC are associated (or correlated) with Nordex SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordex SE has no effect on the direction of Spirax Sarco i.e., Spirax Sarco and Nordex SE go up and down completely randomly.

Pair Corralation between Spirax Sarco and Nordex SE

Assuming the 90 days horizon Spirax Sarco Engineering PLC is expected to generate 1.17 times more return on investment than Nordex SE. However, Spirax Sarco is 1.17 times more volatile than Nordex SE. It trades about 0.0 of its potential returns per unit of risk. Nordex SE is currently generating about -0.19 per unit of risk. If you would invest  4,850  in Spirax Sarco Engineering PLC on September 12, 2024 and sell it today you would lose (62.00) from holding Spirax Sarco Engineering PLC or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Spirax Sarco Engineering PLC  vs.  Nordex SE

Spirax Sarco Enginee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirax Sarco Engineering PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spirax Sarco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nordex SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordex SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Spirax Sarco and Nordex SE

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

The idea behind Spirax Sarco Engineering PLC and Nordex SE 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.