Correlation Between Belden and Harmonic
Can any of the company-specific risk be diversified away by investing in both Belden and Harmonic 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 Belden and Harmonic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belden Inc and Harmonic, you can compare the effects of market volatilities on Belden and Harmonic 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 Belden with a short position of Harmonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and Harmonic.
Diversification Opportunities for Belden and Harmonic
Good diversification
The 3 months correlation between Belden and Harmonic is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and Harmonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmonic and Belden 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 Belden Inc are associated (or correlated) with Harmonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmonic has no effect on the direction of Belden i.e., Belden and Harmonic go up and down completely randomly.
Pair Corralation between Belden and Harmonic
Considering the 90-day investment horizon Belden Inc is expected to generate 0.91 times more return on investment than Harmonic. However, Belden Inc is 1.1 times less risky than Harmonic. It trades about 0.12 of its potential returns per unit of risk. Harmonic is currently generating about -0.35 per unit of risk. If you would invest 11,320 in Belden Inc on November 2, 2024 and sell it today you would earn a total of 438.00 from holding Belden Inc or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belden Inc vs. Harmonic
Performance |
| Timeline |
| Belden Inc |
| Harmonic |
Belden and Harmonic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Belden and Harmonic
The main advantage of trading using opposite Belden and Harmonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden position performs unexpectedly, Harmonic 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 Harmonic will offset losses from the drop in Harmonic's long position.The idea behind Belden Inc and Harmonic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Harmonic vs. NETGEAR | Harmonic vs. Juniper Networks | Harmonic vs. Digi International | Harmonic vs. Clearfield |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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