Correlation Between Celestica and COPT Defense
Can any of the company-specific risk be diversified away by investing in both Celestica and COPT Defense 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 Celestica and COPT Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and COPT Defense Properties, you can compare the effects of market volatilities on Celestica and COPT Defense 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 Celestica with a short position of COPT Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and COPT Defense.
Diversification Opportunities for Celestica and COPT Defense
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Celestica and COPT is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and COPT Defense Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPT Defense Properties and Celestica 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 Celestica are associated (or correlated) with COPT Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPT Defense Properties has no effect on the direction of Celestica i.e., Celestica and COPT Defense go up and down completely randomly.
Pair Corralation between Celestica and COPT Defense
Considering the 90-day investment horizon Celestica is expected to generate 2.05 times more return on investment than COPT Defense. However, Celestica is 2.05 times more volatile than COPT Defense Properties. It trades about 0.16 of its potential returns per unit of risk. COPT Defense Properties is currently generating about 0.05 per unit of risk. If you would invest 1,084 in Celestica on September 12, 2024 and sell it today you would earn a total of 7,716 from holding Celestica or generate 711.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celestica vs. COPT Defense Properties
Performance |
| Timeline |
| Celestica |
| COPT Defense Properties |
Celestica and COPT Defense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and COPT Defense
The main advantage of trading using opposite Celestica and COPT Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica position performs unexpectedly, COPT Defense 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 COPT Defense will offset losses from the drop in COPT Defense's long position.The idea behind Celestica and COPT Defense Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| COPT Defense vs. RadNet Inc | COPT Defense vs. Celestica | COPT Defense vs. Omni Health | COPT Defense vs. Vishay Precision Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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