Correlation Between Spirent Communications and Insulet
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Insulet 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 Insulet 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 Insulet, you can compare the effects of market volatilities on Spirent Communications and Insulet 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 Insulet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Insulet.
Diversification Opportunities for Spirent Communications and Insulet
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and Insulet is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Insulet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insulet 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 Insulet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insulet has no effect on the direction of Spirent Communications i.e., Spirent Communications and Insulet go up and down completely randomly.
Pair Corralation between Spirent Communications and Insulet
Assuming the 90 days horizon Spirent Communications is expected to generate 2.81 times less return on investment than Insulet. But when comparing it to its historical volatility, Spirent Communications plc is 1.64 times less risky than Insulet. It trades about 0.1 of its potential returns per unit of risk. Insulet is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 20,760 in Insulet on September 12, 2024 and sell it today you would earn a total of 4,320 from holding Insulet or generate 20.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Insulet
Performance |
| Timeline |
| Spirent Communications |
| Insulet |
Spirent Communications and Insulet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Insulet
The main advantage of trading using opposite Spirent Communications and Insulet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Insulet 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 Insulet will offset losses from the drop in Insulet's long position.| Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. SIVERS SEMICONDUCTORS AB | Spirent Communications vs. Norsk Hydro ASA | Spirent Communications vs. Reliance Steel Aluminum |
| Insulet vs. Hyster Yale Materials Handling | Insulet vs. Siamgas And Petrochemicals | Insulet vs. Marie Brizard Wine | Insulet vs. TITANIUM TRANSPORTGROUP |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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