Correlation Between Spirent Communications and Commerzbank
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Commerzbank 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 Commerzbank 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 Commerzbank AG, you can compare the effects of market volatilities on Spirent Communications and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Commerzbank.
Diversification Opportunities for Spirent Communications and Commerzbank
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and Commerzbank is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank AG 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of Spirent Communications i.e., Spirent Communications and Commerzbank go up and down completely randomly.
Pair Corralation between Spirent Communications and Commerzbank
Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.44 times more return on investment than Commerzbank. However, Spirent Communications plc is 2.29 times less risky than Commerzbank. It trades about 0.15 of its potential returns per unit of risk. Commerzbank AG is currently generating about -0.26 per unit of risk. If you would invest 200.00 in Spirent Communications plc on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Spirent Communications plc or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Commerzbank AG
Performance |
| Timeline |
| Spirent Communications |
| Commerzbank AG |
Spirent Communications and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Commerzbank
The main advantage of trading using opposite Spirent Communications and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank's long position.| Spirent Communications vs. Addus HomeCare | Spirent Communications vs. United Rentals | Spirent Communications vs. Hyster Yale Materials Handling | Spirent Communications vs. Corporate Office Properties |
| Commerzbank vs. Chunghwa Telecom Co | Commerzbank vs. Dairy Farm International | Commerzbank vs. United Natural Foods | Commerzbank vs. Spirent Communications plc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |