Correlation Between Juniper Networks and Telefonaktiebolaget
Can any of the company-specific risk be diversified away by investing in both Juniper Networks and Telefonaktiebolaget 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 Juniper Networks and Telefonaktiebolaget into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Juniper Networks and Telefonaktiebolaget LM Ericsson, you can compare the effects of market volatilities on Juniper Networks and Telefonaktiebolaget 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 Juniper Networks with a short position of Telefonaktiebolaget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juniper Networks and Telefonaktiebolaget.
Diversification Opportunities for Juniper Networks and Telefonaktiebolaget
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Juniper and Telefonaktiebolaget is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and Telefonaktiebolaget LM Ericsso in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefonaktiebolaget and Juniper 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 Juniper Networks are associated (or correlated) with Telefonaktiebolaget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefonaktiebolaget has no effect on the direction of Juniper Networks i.e., Juniper Networks and Telefonaktiebolaget go up and down completely randomly.
Pair Corralation between Juniper Networks and Telefonaktiebolaget
Given the investment horizon of 90 days Juniper Networks is expected to generate 2.31 times less return on investment than Telefonaktiebolaget. But when comparing it to its historical volatility, Juniper Networks is 1.21 times less risky than Telefonaktiebolaget. It trades about 0.04 of its potential returns per unit of risk. Telefonaktiebolaget LM Ericsson is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 484.00 in Telefonaktiebolaget LM Ericsson on August 31, 2024 and sell it today you would earn a total of 330.00 from holding Telefonaktiebolaget LM Ericsson or generate 68.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Juniper Networks vs. Telefonaktiebolaget LM Ericsso
Performance |
| Timeline |
| Juniper Networks |
| Telefonaktiebolaget |
Juniper Networks and Telefonaktiebolaget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Juniper Networks and Telefonaktiebolaget
The main advantage of trading using opposite Juniper Networks and Telefonaktiebolaget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Juniper Networks position performs unexpectedly, Telefonaktiebolaget 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 Telefonaktiebolaget will offset losses from the drop in Telefonaktiebolaget's long position.| Juniper Networks vs. Infinera | Juniper Networks vs. Lumentum Holdings | Juniper Networks vs. Extreme Networks | Juniper Networks vs. Clearfield |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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