Correlation Between Spirit Airlines and EQGP Holdings

Can any of the company-specific risk be diversified away by investing in both Spirit Airlines and EQGP Holdings 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 Spirit Airlines and EQGP Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spirit Airlines and EQGP Holdings LP, you can compare the effects of market volatilities on Spirit Airlines and EQGP Holdings 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 Spirit Airlines with a short position of EQGP Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Airlines and EQGP Holdings.

Diversification Opportunities for Spirit Airlines and EQGP Holdings

0.0

Correlation Coefficient

Spirit Airlines  EQGP Holdings

Pay attention - limited upside

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

Pair Corralation between Spirit Airlines and EQGP Holdings

If you would invest  0.00  in EQGP Holdings LP on February 5, 2024 and sell it today you would earn a total of  0.00  from holding EQGP Holdings LP or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Spirit Airlines  vs.  EQGP Holdings LP

Spirit Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirit Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

EQGP Holdings LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EQGP Holdings LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, EQGP Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Spirit Airlines and EQGP Holdings

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

The idea behind Spirit Airlines and EQGP Holdings LP 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.