Correlation Between Clearfield and Xerox Corp
Can any of the company-specific risk be diversified away by investing in both Clearfield and Xerox Corp 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 Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearfield and Xerox Corp, you can compare the effects of market volatilities on Clearfield and Xerox Corp 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 Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearfield and Xerox Corp.
Diversification Opportunities for Clearfield and Xerox Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clearfield and Xerox is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp 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 Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of Clearfield i.e., Clearfield and Xerox Corp go up and down completely randomly.
Pair Corralation between Clearfield and Xerox Corp
Given the investment horizon of 90 days Clearfield is expected to under-perform the Xerox Corp. But the stock apears to be less risky and, when comparing its historical volatility, Clearfield is 1.25 times less risky than Xerox Corp. The stock trades about -0.12 of its potential returns per unit of risk. The Xerox Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,106 in Xerox Corp on August 30, 2024 and sell it today you would lose (200.00) from holding Xerox Corp or give up 18.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearfield vs. Xerox Corp
Performance |
| Timeline |
| Clearfield |
| Xerox Corp |
Clearfield and Xerox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearfield and Xerox Corp
The main advantage of trading using opposite Clearfield and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearfield position performs unexpectedly, Xerox Corp 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 Xerox Corp will offset losses from the drop in Xerox Corp's long position.| Clearfield vs. Comtech Telecommunications Corp | Clearfield vs. Knowles Cor | Clearfield vs. Extreme Networks | Clearfield vs. KVH Industries |
| Xerox Corp vs. ExlService Holdings | Xerox Corp vs. CSP Inc | Xerox Corp vs. ASGN Inc | Xerox Corp vs. Jack Henry Associates |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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