Correlation Between F5 Networks and Deswell Industries
Can any of the company-specific risk be diversified away by investing in both F5 Networks and Deswell Industries 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 F5 Networks and Deswell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between F5 Networks and Deswell Industries, you can compare the effects of market volatilities on F5 Networks and Deswell Industries 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 F5 Networks with a short position of Deswell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of F5 Networks and Deswell Industries.
Diversification Opportunities for F5 Networks and Deswell Industries
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FFIV and Deswell is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding F5 Networks and Deswell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deswell Industries and F5 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 F5 Networks are associated (or correlated) with Deswell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deswell Industries has no effect on the direction of F5 Networks i.e., F5 Networks and Deswell Industries go up and down completely randomly.
Pair Corralation between F5 Networks and Deswell Industries
Given the investment horizon of 90 days F5 Networks is expected to generate 1.11 times more return on investment than Deswell Industries. However, F5 Networks is 1.11 times more volatile than Deswell Industries. It trades about 0.2 of its potential returns per unit of risk. Deswell Industries is currently generating about -0.02 per unit of risk. If you would invest 21,851 in F5 Networks on October 31, 2024 and sell it today you would earn a total of 8,195 from holding F5 Networks or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
F5 Networks vs. Deswell Industries
Performance |
| Timeline |
| F5 Networks |
| Deswell Industries |
F5 Networks and Deswell Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with F5 Networks and Deswell Industries
The main advantage of trading using opposite F5 Networks and Deswell Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F5 Networks position performs unexpectedly, Deswell Industries 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 Deswell Industries will offset losses from the drop in Deswell Industries' long position.| F5 Networks vs. VeriSign | F5 Networks vs. Check Point Software | F5 Networks vs. Qualys Inc | F5 Networks vs. CyberArk Software |
| Deswell Industries vs. Ieh Corp | Deswell Industries vs. LGL Group | Deswell Industries vs. SigmaTron International | Deswell Industries vs. Daktronics |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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