Correlation Between ADTRAN and Casa Systems
Can any of the company-specific risk be diversified away by investing in both ADTRAN and Casa Systems 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 Casa Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and Casa Systems, you can compare the effects of market volatilities on ADTRAN and Casa Systems 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 Casa Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and Casa Systems.
Diversification Opportunities for ADTRAN and Casa Systems
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between ADTRAN and Casa is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and Casa Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casa Systems 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 Casa Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casa Systems has no effect on the direction of ADTRAN i.e., ADTRAN and Casa Systems go up and down completely randomly.
Pair Corralation between ADTRAN and Casa Systems
Given the investment horizon of 90 days ADTRAN Inc is expected to generate 0.56 times more return on investment than Casa Systems. However, ADTRAN Inc is 1.77 times less risky than Casa Systems. It trades about -0.03 of its potential returns per unit of risk. Casa Systems is currently generating about -0.05 per unit of risk. If you would invest 2,007 in ADTRAN Inc on August 24, 2024 and sell it today you would lose (1,145) from holding ADTRAN Inc or give up 57.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 32.06% |
| Values | Daily Returns |
ADTRAN Inc vs. Casa Systems
Performance |
| Timeline |
| ADTRAN Inc |
| Casa Systems |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ADTRAN and Casa Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and Casa Systems
The main advantage of trading using opposite ADTRAN and Casa Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN position performs unexpectedly, Casa Systems 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 Casa Systems will offset losses from the drop in Casa Systems' long position.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
| Casa Systems vs. ADTRAN Inc | Casa Systems vs. Comtech Telecommunications Corp | Casa Systems vs. Digi International | Casa Systems vs. KVH Industries |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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