Correlation Between Spirent Communications and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Haier Smart 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 Haier Smart 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 Haier Smart Home, you can compare the effects of market volatilities on Spirent Communications and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Haier Smart.
Diversification Opportunities for Spirent Communications and Haier Smart
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Haier is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Spirent Communications i.e., Spirent Communications and Haier Smart go up and down completely randomly.
Pair Corralation between Spirent Communications and Haier Smart
Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.63 times more return on investment than Haier Smart. However, Spirent Communications plc is 1.59 times less risky than Haier Smart. It trades about 0.05 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.07 per unit of risk. If you would invest 202.00 in Spirent Communications plc on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Spirent Communications plc or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Spirent Communications plc vs. Haier Smart Home
Performance |
| Timeline |
| Spirent Communications |
| Haier Smart Home |
Spirent Communications and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Haier Smart
The main advantage of trading using opposite Spirent Communications and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| Spirent Communications vs. Verizon Communications | Spirent Communications vs. ATT Inc | Spirent Communications vs. ATT Inc | Spirent Communications vs. Deutsche Telekom AG |
| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |