Correlation Between EMCORE and Clearfield
Can any of the company-specific risk be diversified away by investing in both EMCORE and Clearfield 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 EMCORE and Clearfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCORE and Clearfield, you can compare the effects of market volatilities on EMCORE and Clearfield 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 EMCORE with a short position of Clearfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCORE and Clearfield.
Diversification Opportunities for EMCORE and Clearfield
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EMCORE and Clearfield is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding EMCORE and Clearfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearfield and EMCORE 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 EMCORE are associated (or correlated) with Clearfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearfield has no effect on the direction of EMCORE i.e., EMCORE and Clearfield go up and down completely randomly.
Pair Corralation between EMCORE and Clearfield
Given the investment horizon of 90 days EMCORE is expected to generate 17.03 times less return on investment than Clearfield. But when comparing it to its historical volatility, EMCORE is 3.33 times less risky than Clearfield. It trades about 0.1 of its potential returns per unit of risk. Clearfield is currently generating about 0.53 of returns per unit of risk over similar time horizon. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCORE vs. Clearfield
Performance |
| Timeline |
| EMCORE |
| Clearfield |
EMCORE and Clearfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCORE and Clearfield
The main advantage of trading using opposite EMCORE and Clearfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCORE position performs unexpectedly, Clearfield 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 Clearfield will offset losses from the drop in Clearfield's long position.The idea behind EMCORE and Clearfield 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.| Clearfield vs. Comtech Telecommunications Corp | Clearfield vs. Knowles Cor | Clearfield vs. Extreme Networks | Clearfield vs. KVH Industries |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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