Correlation Between F5 Networks and Gen Digital
Can any of the company-specific risk be diversified away by investing in both F5 Networks and Gen Digital 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 Gen Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between F5 Networks and Gen Digital, you can compare the effects of market volatilities on F5 Networks and Gen Digital 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 Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of F5 Networks and Gen Digital.
Diversification Opportunities for F5 Networks and Gen Digital
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FFIV and Gen is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding F5 Networks and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of F5 Networks i.e., F5 Networks and Gen Digital go up and down completely randomly.
Pair Corralation between F5 Networks and Gen Digital
Given the investment horizon of 90 days F5 Networks is expected to generate 1.37 times more return on investment than Gen Digital. However, F5 Networks is 1.37 times more volatile than Gen Digital. It trades about 0.24 of its potential returns per unit of risk. Gen Digital is currently generating about -0.06 per unit of risk. If you would invest 23,999 in F5 Networks on November 18, 2024 and sell it today you would earn a total of 7,019 from holding F5 Networks or generate 29.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
F5 Networks vs. Gen Digital
Performance |
| Timeline |
| F5 Networks |
| Gen Digital |
F5 Networks and Gen Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with F5 Networks and Gen Digital
The main advantage of trading using opposite F5 Networks and Gen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F5 Networks position performs unexpectedly, Gen Digital 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 Gen Digital will offset losses from the drop in Gen Digital's long position.| F5 Networks vs. VeriSign | F5 Networks vs. Check Point Software | F5 Networks vs. Qualys Inc | F5 Networks vs. CyberArk Software |
| Gen Digital vs. Wex Inc | Gen Digital vs. CSG Systems International | Gen Digital vs. VeriSign | Gen Digital vs. Global Blue Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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