Correlation Between Aeorema Communications and F5 Networks
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and F5 Networks 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 Aeorema Communications and F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and F5 Networks, you can compare the effects of market volatilities on Aeorema Communications and F5 Networks 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 Aeorema Communications with a short position of F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and F5 Networks.
Diversification Opportunities for Aeorema Communications and F5 Networks
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aeorema and 0IL6 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and F5 Networks go up and down completely randomly.
Pair Corralation between Aeorema Communications and F5 Networks
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to generate 1.32 times more return on investment than F5 Networks. However, Aeorema Communications is 1.32 times more volatile than F5 Networks. It trades about 0.38 of its potential returns per unit of risk. F5 Networks is currently generating about 0.29 per unit of risk. If you would invest 5,250 in Aeorema Communications Plc on September 14, 2024 and sell it today you would earn a total of 600.00 from holding Aeorema Communications Plc or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. F5 Networks
Performance |
| Timeline |
| Aeorema Communications |
| F5 Networks |
Aeorema Communications and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and F5 Networks
The main advantage of trading using opposite Aeorema Communications and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.| Aeorema Communications vs. Verizon Communications | Aeorema Communications vs. Cairo Communication SpA | Aeorema Communications vs. Gamma Communications PLC | Aeorema Communications vs. mobilezone holding AG |
| F5 Networks vs. AMG Advanced Metallurgical | F5 Networks vs. Datalogic | F5 Networks vs. BE Semiconductor Industries | F5 Networks vs. Extra Space Storage |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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