Correlation Between Advanced Energy and Network 1
Can any of the company-specific risk be diversified away by investing in both Advanced Energy and Network 1 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 Advanced Energy and Network 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Energy Industries and Network 1 Technologies, you can compare the effects of market volatilities on Advanced Energy and Network 1 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 Advanced Energy with a short position of Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Energy and Network 1.
Diversification Opportunities for Advanced Energy and Network 1
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Advanced and Network is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Energy Industries and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies and Advanced Energy 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 Advanced Energy Industries are associated (or correlated) with Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Advanced Energy i.e., Advanced Energy and Network 1 go up and down completely randomly.
Pair Corralation between Advanced Energy and Network 1
Given the investment horizon of 90 days Advanced Energy is expected to generate 1.24 times less return on investment than Network 1. In addition to that, Advanced Energy is 1.67 times more volatile than Network 1 Technologies. It trades about 0.09 of its total potential returns per unit of risk. Network 1 Technologies is currently generating about 0.18 per unit of volatility. If you would invest 128.00 in Network 1 Technologies on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Network 1 Technologies or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Advanced Energy Industries vs. Network 1 Technologies
Performance |
| Timeline |
| Advanced Energy Indu |
| Network 1 Technologies |
Advanced Energy and Network 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Energy and Network 1
The main advantage of trading using opposite Advanced Energy and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Energy position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.| Advanced Energy vs. MKS Instruments | Advanced Energy vs. Axcelis Technologies | Advanced Energy vs. Entegris | Advanced Energy vs. Cohu Inc |
| Network 1 vs. Civeo Corp | Network 1 vs. BrightView Holdings | Network 1 vs. Maximus | Network 1 vs. CBIZ Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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