Correlation Between Frequency Electronics and Aviat Networks
Can any of the company-specific risk be diversified away by investing in both Frequency Electronics and Aviat Networks 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 Frequency Electronics and Aviat Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frequency Electronics and Aviat Networks, you can compare the effects of market volatilities on Frequency Electronics and Aviat Networks 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 Frequency Electronics with a short position of Aviat Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frequency Electronics and Aviat Networks.
Diversification Opportunities for Frequency Electronics and Aviat Networks
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Frequency and Aviat is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and Aviat Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aviat Networks and Frequency Electronics 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 Frequency Electronics are associated (or correlated) with Aviat Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aviat Networks has no effect on the direction of Frequency Electronics i.e., Frequency Electronics and Aviat Networks go up and down completely randomly.
Pair Corralation between Frequency Electronics and Aviat Networks
Given the investment horizon of 90 days Frequency Electronics is expected to under-perform the Aviat Networks. In addition to that, Frequency Electronics is 1.01 times more volatile than Aviat Networks. It trades about -0.14 of its total potential returns per unit of risk. Aviat Networks is currently generating about 0.34 per unit of volatility. If you would invest 1,691 in Aviat Networks on October 24, 2024 and sell it today you would earn a total of 268.00 from holding Aviat Networks or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frequency Electronics vs. Aviat Networks
Performance |
| Timeline |
| Frequency Electronics |
| Aviat Networks |
Frequency Electronics and Aviat Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frequency Electronics and Aviat Networks
The main advantage of trading using opposite Frequency Electronics and Aviat Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frequency Electronics position performs unexpectedly, Aviat Networks 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 Aviat Networks will offset losses from the drop in Aviat Networks' long position.| Frequency Electronics vs. BK Technologies | Frequency Electronics vs. Actelis Networks | Frequency Electronics vs. Lantronix | Frequency Electronics vs. KVH Industries |
| Aviat Networks vs. AudioCodes | Aviat Networks vs. Silicom | Aviat Networks vs. Gilat Satellite Networks | Aviat Networks vs. Mynaric AG ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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