Correlation Between ADTRAN and Main International
Can any of the company-specific risk be diversified away by investing in both ADTRAN and Main International 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 Main International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and Main International ETF, you can compare the effects of market volatilities on ADTRAN and Main International 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 Main International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and Main International.
Diversification Opportunities for ADTRAN and Main International
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ADTRAN and Main is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and Main International ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main International ETF 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 Main International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main International ETF has no effect on the direction of ADTRAN i.e., ADTRAN and Main International go up and down completely randomly.
Pair Corralation between ADTRAN and Main International
Given the investment horizon of 90 days ADTRAN Inc is expected to generate 4.5 times more return on investment than Main International. However, ADTRAN is 4.5 times more volatile than Main International ETF. It trades about 0.24 of its potential returns per unit of risk. Main International ETF is currently generating about 0.23 per unit of risk. If you would invest 870.00 in ADTRAN Inc on November 3, 2024 and sell it today you would earn a total of 167.00 from holding ADTRAN Inc or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADTRAN Inc vs. Main International ETF
Performance |
| Timeline |
| ADTRAN Inc |
| Main International ETF |
ADTRAN and Main International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and Main International
The main advantage of trading using opposite ADTRAN and Main International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN position performs unexpectedly, Main International 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 Main International will offset losses from the drop in Main International's long position.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
| Main International vs. ADTRAN Inc | Main International vs. International Business Machines | Main International vs. Integrated Ventures | Main International vs. Harmonic |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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