Correlation Between Extreme Networks and Clearfield
Can any of the company-specific risk be diversified away by investing in both Extreme Networks 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 Extreme Networks and Clearfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extreme Networks and Clearfield, you can compare the effects of market volatilities on Extreme Networks 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 Extreme Networks with a short position of Clearfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extreme Networks and Clearfield.
Diversification Opportunities for Extreme Networks and Clearfield
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Extreme and Clearfield is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Extreme Networks and Clearfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearfield and Extreme Networks 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 Extreme Networks 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 Extreme Networks i.e., Extreme Networks and Clearfield go up and down completely randomly.
Pair Corralation between Extreme Networks and Clearfield
Given the investment horizon of 90 days Extreme Networks is expected to generate 1.15 times more return on investment than Clearfield. However, Extreme Networks is 1.15 times more volatile than Clearfield. It trades about 0.17 of its potential returns per unit of risk. Clearfield is currently generating about -0.3 per unit of risk. If you would invest 1,425 in Extreme Networks on August 27, 2024 and sell it today you would earn a total of 178.00 from holding Extreme Networks or generate 12.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extreme Networks vs. Clearfield
Performance |
| Timeline |
| Extreme Networks |
| Clearfield |
Extreme Networks and Clearfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extreme Networks and Clearfield
The main advantage of trading using opposite Extreme Networks and Clearfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extreme Networks 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.| Extreme Networks vs. Knowles Cor | Extreme Networks vs. KVH Industries | Extreme Networks vs. Comtech Telecommunications Corp | Extreme Networks vs. EchoStar |
| Clearfield vs. Ichor Holdings | Clearfield vs. Fabrinet | Clearfield vs. Hello Group | Clearfield vs. Ultra Clean Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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