Correlation Between Juniper Networks and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Juniper Networks and STMicroelectronics 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 Juniper Networks and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Juniper Networks and STMicroelectronics NV, you can compare the effects of market volatilities on Juniper Networks and STMicroelectronics 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 Juniper Networks with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juniper Networks and STMicroelectronics.
Diversification Opportunities for Juniper Networks and STMicroelectronics
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Juniper and STMicroelectronics is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Juniper Networks 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 Juniper Networks are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Juniper Networks i.e., Juniper Networks and STMicroelectronics go up and down completely randomly.
Pair Corralation between Juniper Networks and STMicroelectronics
Assuming the 90 days trading horizon Juniper Networks is expected to generate 0.35 times more return on investment than STMicroelectronics. However, Juniper Networks is 2.89 times less risky than STMicroelectronics. It trades about 0.08 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.12 per unit of risk. If you would invest 3,516 in Juniper Networks on October 17, 2024 and sell it today you would earn a total of 339.00 from holding Juniper Networks or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.92% |
| Values | Daily Returns |
Juniper Networks vs. STMicroelectronics NV
Performance |
| Timeline |
| Juniper Networks |
| STMicroelectronics |
Juniper Networks and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Juniper Networks and STMicroelectronics
The main advantage of trading using opposite Juniper Networks and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Juniper Networks position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Juniper Networks vs. JLEN Environmental Assets | Juniper Networks vs. Scandinavian Tobacco Group | Juniper Networks vs. Vulcan Materials Co | Juniper Networks vs. Monster Beverage Corp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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