Correlation Between ADTRAN and Stagwell
Can any of the company-specific risk be diversified away by investing in both ADTRAN and Stagwell 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 Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and Stagwell, you can compare the effects of market volatilities on ADTRAN and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and Stagwell.
Diversification Opportunities for ADTRAN and Stagwell
Very weak diversification
The 3 months correlation between ADTRAN and Stagwell is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of ADTRAN i.e., ADTRAN and Stagwell go up and down completely randomly.
Pair Corralation between ADTRAN and Stagwell
Given the investment horizon of 90 days ADTRAN Inc is expected to generate 1.83 times more return on investment than Stagwell. However, ADTRAN is 1.83 times more volatile than Stagwell. It trades about 0.32 of its potential returns per unit of risk. Stagwell is currently generating about 0.4 per unit of risk. If you would invest 636.00 in ADTRAN Inc on August 27, 2024 and sell it today you would earn a total of 232.00 from holding ADTRAN Inc or generate 36.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADTRAN Inc vs. Stagwell
Performance |
| Timeline |
| ADTRAN Inc |
| Stagwell |
ADTRAN and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and Stagwell
The main advantage of trading using opposite ADTRAN and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
| Stagwell vs. ADTRAN Inc | Stagwell vs. Belden Inc | Stagwell vs. ADC Therapeutics SA | Stagwell vs. Comtech Telecommunications Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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