Correlation Between Ciena Corp and Network 1
Can any of the company-specific risk be diversified away by investing in both Ciena Corp and Network 1 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 Ciena Corp and Network 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ciena Corp and Network 1 Technologies, you can compare the effects of market volatilities on Ciena Corp and Network 1 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 Ciena Corp with a short position of Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ciena Corp and Network 1.
Diversification Opportunities for Ciena Corp and Network 1
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ciena and Network is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ciena Corp and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies and Ciena Corp 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 Ciena Corp are associated (or correlated) with Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Ciena Corp i.e., Ciena Corp and Network 1 go up and down completely randomly.
Pair Corralation between Ciena Corp and Network 1
Given the investment horizon of 90 days Ciena Corp is expected to generate 1.49 times more return on investment than Network 1. However, Ciena Corp is 1.49 times more volatile than Network 1 Technologies. It trades about 0.27 of its potential returns per unit of risk. Network 1 Technologies is currently generating about 0.16 per unit of risk. If you would invest 6,324 in Ciena Corp on September 4, 2024 and sell it today you would earn a total of 781.00 from holding Ciena Corp or generate 12.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ciena Corp vs. Network 1 Technologies
Performance |
| Timeline |
| Ciena Corp |
| Network 1 Technologies |
Ciena Corp and Network 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ciena Corp and Network 1
The main advantage of trading using opposite Ciena Corp and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ciena Corp position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.| Ciena Corp vs. Extreme Networks | Ciena Corp vs. Hewlett Packard Enterprise | Ciena Corp vs. NETGEAR | Ciena Corp vs. Motorola Solutions |
| Network 1 vs. Civeo Corp | Network 1 vs. BrightView Holdings | Network 1 vs. Maximus | Network 1 vs. CBIZ 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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