Correlation Between ADTRAN and Airgain
Can any of the company-specific risk be diversified away by investing in both ADTRAN and Airgain 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 ADTRAN and Airgain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and Airgain, you can compare the effects of market volatilities on ADTRAN and Airgain 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 ADTRAN with a short position of Airgain. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and Airgain.
Diversification Opportunities for ADTRAN and Airgain
Excellent diversification
The 3 months correlation between ADTRAN and Airgain is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and Airgain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airgain and ADTRAN 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 ADTRAN Inc are associated (or correlated) with Airgain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airgain has no effect on the direction of ADTRAN i.e., ADTRAN and Airgain go up and down completely randomly.
Pair Corralation between ADTRAN and Airgain
Given the investment horizon of 90 days ADTRAN Inc is expected to generate 1.18 times more return on investment than Airgain. However, ADTRAN is 1.18 times more volatile than Airgain. It trades about 0.14 of its potential returns per unit of risk. Airgain is currently generating about -0.15 per unit of risk. If you would invest 949.00 in ADTRAN Inc on November 28, 2024 and sell it today you would earn a total of 94.00 from holding ADTRAN Inc or generate 9.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADTRAN Inc vs. Airgain
Performance |
| Timeline |
| ADTRAN Inc |
| Airgain |
ADTRAN and Airgain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and Airgain
The main advantage of trading using opposite ADTRAN and Airgain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN position performs unexpectedly, Airgain 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 Airgain will offset losses from the drop in Airgain's long position.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
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 Stocks Directory module to find actively traded stocks across global markets.
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