Correlation Between Extreme Networks and Stratasys
Can any of the company-specific risk be diversified away by investing in both Extreme Networks and Stratasys 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 Stratasys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extreme Networks and Stratasys, you can compare the effects of market volatilities on Extreme Networks and Stratasys 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 Stratasys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extreme Networks and Stratasys.
Diversification Opportunities for Extreme Networks and Stratasys
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Extreme and Stratasys is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Extreme Networks and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of Extreme Networks i.e., Extreme Networks and Stratasys go up and down completely randomly.
Pair Corralation between Extreme Networks and Stratasys
Given the investment horizon of 90 days Extreme Networks is expected to generate 1.72 times less return on investment than Stratasys. But when comparing it to its historical volatility, Extreme Networks is 1.7 times less risky than Stratasys. It trades about 0.2 of its potential returns per unit of risk. Stratasys is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 770.00 in Stratasys on August 27, 2024 and sell it today you would earn a total of 206.00 from holding Stratasys or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extreme Networks vs. Stratasys
Performance |
| Timeline |
| Extreme Networks |
| Stratasys |
Extreme Networks and Stratasys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extreme Networks and Stratasys
The main advantage of trading using opposite Extreme Networks and Stratasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extreme Networks position performs unexpectedly, Stratasys 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 Stratasys will offset losses from the drop in Stratasys' long position.| Extreme Networks vs. Knowles Cor | Extreme Networks vs. KVH Industries | Extreme Networks vs. Comtech Telecommunications Corp | Extreme Networks vs. EchoStar |
| Stratasys vs. D Wave Quantum | Stratasys vs. Rigetti Computing | Stratasys vs. Cricut Inc | Stratasys vs. Quantum Computing |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |