Correlation Between Applied Opt and Ubiquiti Networks
Can any of the company-specific risk be diversified away by investing in both Applied Opt and Ubiquiti Networks 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 Applied Opt and Ubiquiti Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Opt and Ubiquiti Networks, you can compare the effects of market volatilities on Applied Opt and Ubiquiti Networks 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 Applied Opt with a short position of Ubiquiti Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Opt and Ubiquiti Networks.
Diversification Opportunities for Applied Opt and Ubiquiti Networks
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Applied and Ubiquiti is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Applied Opt and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks and Applied Opt 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 Applied Opt are associated (or correlated) with Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of Applied Opt i.e., Applied Opt and Ubiquiti Networks go up and down completely randomly.
Pair Corralation between Applied Opt and Ubiquiti Networks
Given the investment horizon of 90 days Applied Opt is expected to generate 2.56 times more return on investment than Ubiquiti Networks. However, Applied Opt is 2.56 times more volatile than Ubiquiti Networks. It trades about 0.34 of its potential returns per unit of risk. Ubiquiti Networks is currently generating about 0.3 per unit of risk. If you would invest 1,635 in Applied Opt on August 31, 2024 and sell it today you would earn a total of 2,007 from holding Applied Opt or generate 122.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Opt vs. Ubiquiti Networks
Performance |
| Timeline |
| Applied Opt |
| Ubiquiti Networks |
Applied Opt and Ubiquiti Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Opt and Ubiquiti Networks
The main advantage of trading using opposite Applied Opt and Ubiquiti Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Opt position performs unexpectedly, Ubiquiti Networks 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 Ubiquiti Networks will offset losses from the drop in Ubiquiti Networks' long position.| Applied Opt vs. Lumentum Holdings | Applied Opt vs. Ichor Holdings | Applied Opt vs. Fabrinet | Applied Opt vs. Hello Group |
| Ubiquiti Networks vs. Credo Technology Group | Ubiquiti Networks vs. Zebra Technologies | Ubiquiti Networks vs. Ciena Corp | Ubiquiti Networks vs. Clearfield |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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