Correlation Between Spire Global and System1

Can any of the company-specific risk be diversified away by investing in both Spire Global and System1 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 System1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Spire Global and System1, you can compare the effects of market volatilities on Spire Global and System1 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 System1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and System1.

Diversification Opportunities for Spire Global and System1

-0.1

Correlation Coefficient

Spire Global  System1

Good diversification

The 3 months correlation between Spire and System1 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and System1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System1 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 System1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System1 has no effect on the direction of Spire Global i.e., Spire Global and System1 go up and down completely randomly.

Pair Corralation between Spire Global and System1

Given the investment horizon of 90 days Spire Global is expected to generate 4.19 times less return on investment than System1. But when comparing it to its historical volatility, Spire Global is 2.43 times less risky than System1. It trades about 0.03 of its potential returns per unit of risk. System1 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  510.00  in System1 on May 11, 2025 and sell it today you would earn a total of  34.00  from holding System1 or generate 6.67% return on investment over 90 days.

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

Spire Global  vs.  System1

Spire Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Spire Global may actually be approaching a critical reversion point that can send shares even higher in September 2025.

System1

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in System1 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, System1 unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Global and System1

The main advantage of trading using opposite Spire Global and System1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global position performs unexpectedly, System1 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 System1 will offset losses from the drop in System1's long position.

The idea behind Spire Global and System1 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.