Correlation Between Spirent Communications and PLAYMATES TOYS
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and PLAYMATES TOYS 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 Spirent Communications and PLAYMATES TOYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and PLAYMATES TOYS, you can compare the effects of market volatilities on Spirent Communications and PLAYMATES TOYS 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 Spirent Communications with a short position of PLAYMATES TOYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and PLAYMATES TOYS.
Diversification Opportunities for Spirent Communications and PLAYMATES TOYS
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and PLAYMATES is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and PLAYMATES TOYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYMATES TOYS and Spirent 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 Spirent Communications plc are associated (or correlated) with PLAYMATES TOYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYMATES TOYS has no effect on the direction of Spirent Communications i.e., Spirent Communications and PLAYMATES TOYS go up and down completely randomly.
Pair Corralation between Spirent Communications and PLAYMATES TOYS
Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.54 times more return on investment than PLAYMATES TOYS. However, Spirent Communications plc is 1.86 times less risky than PLAYMATES TOYS. It trades about 0.0 of its potential returns per unit of risk. PLAYMATES TOYS is currently generating about -0.05 per unit of risk. If you would invest 218.00 in Spirent Communications plc on October 25, 2024 and sell it today you would lose (2.00) from holding Spirent Communications plc or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. PLAYMATES TOYS
Performance |
| Timeline |
| Spirent Communications |
| PLAYMATES TOYS |
Spirent Communications and PLAYMATES TOYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and PLAYMATES TOYS
The main advantage of trading using opposite Spirent Communications and PLAYMATES TOYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, PLAYMATES TOYS 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 PLAYMATES TOYS will offset losses from the drop in PLAYMATES TOYS's long position.| Spirent Communications vs. Easy Software AG | Spirent Communications vs. SCOTT TECHNOLOGY | Spirent Communications vs. Summit Hotel Properties | Spirent Communications vs. Wyndham Hotels Resorts |
| PLAYMATES TOYS vs. Iridium Communications | PLAYMATES TOYS vs. Spirent Communications plc | PLAYMATES TOYS vs. Cairo Communication SpA | PLAYMATES TOYS vs. CITIC Telecom International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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