Correlation Between Clearfield and Extreme Networks
Can any of the company-specific risk be diversified away by investing in both Clearfield and Extreme Networks 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 Clearfield and Extreme Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearfield and Extreme Networks, you can compare the effects of market volatilities on Clearfield and Extreme Networks 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 Clearfield with a short position of Extreme Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearfield and Extreme Networks.
Diversification Opportunities for Clearfield and Extreme Networks
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clearfield and Extreme is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and Extreme Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extreme Networks and Clearfield 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 Clearfield are associated (or correlated) with Extreme Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extreme Networks has no effect on the direction of Clearfield i.e., Clearfield and Extreme Networks go up and down completely randomly.
Pair Corralation between Clearfield and Extreme Networks
Given the investment horizon of 90 days Clearfield is expected to generate 1.42 times more return on investment than Extreme Networks. However, Clearfield is 1.42 times more volatile than Extreme Networks. It trades about 0.53 of its potential returns per unit of risk. Extreme Networks is currently generating about -0.07 per unit of risk. If you would invest 3,049 in Clearfield on October 20, 2024 and sell it today you would earn a total of 788.00 from holding Clearfield or generate 25.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearfield vs. Extreme Networks
Performance |
| Timeline |
| Clearfield |
| Extreme Networks |
Clearfield and Extreme Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearfield and Extreme Networks
The main advantage of trading using opposite Clearfield and Extreme Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearfield position performs unexpectedly, Extreme Networks 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 Extreme Networks will offset losses from the drop in Extreme Networks' long position.| Clearfield vs. Comtech Telecommunications Corp | Clearfield vs. Knowles Cor | Clearfield vs. Extreme Networks | Clearfield vs. KVH Industries |
| Extreme Networks vs. Knowles Cor | Extreme Networks vs. KVH Industries | Extreme Networks vs. Comtech Telecommunications Corp | Extreme Networks vs. EchoStar |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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