Correlation Between Spire Global and Monarca Minerals

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

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

Diversification Opportunities for Spire Global and Monarca Minerals

0.0

Correlation Coefficient

Spire Global  Monarca Minerals

Pay attention - limited upside

The 3 months correlation between Spire and Monarca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Monarca Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarca Minerals 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 Monarca Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarca Minerals has no effect on the direction of Spire Global i.e., Spire Global and Monarca Minerals go up and down completely randomly.

Pair Corralation between Spire Global and Monarca Minerals

Given the investment horizon of 90 days Spire Global is expected to generate 0.43 times more return on investment than Monarca Minerals. However, Spire Global is 2.34 times less risky than Monarca Minerals. It trades about 0.36 of its potential returns per unit of risk. Monarca Minerals is currently generating about -0.21 per unit of risk. If you would invest  1,050  in Spire Global on September 8, 2024 and sell it today you would earn a total of  426.00  from holding Spire Global or generate 40.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Spire Global  vs.  Monarca Minerals

Spire Global

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 19 (%) 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.

Monarca Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarca Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Spire Global and Monarca Minerals

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

The idea behind Spire Global and Monarca Minerals 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.