Correlation Between Open Text and Celestica
Can any of the company-specific risk be diversified away by investing in both Open Text and Celestica 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 Open Text and Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Open Text Corp and Celestica, you can compare the effects of market volatilities on Open Text and Celestica 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 Open Text with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Text and Celestica.
Diversification Opportunities for Open Text and Celestica
Very good diversification
The 3 months correlation between Open and Celestica is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Open Text Corp and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Open Text 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 Open Text Corp are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Open Text i.e., Open Text and Celestica go up and down completely randomly.
Pair Corralation between Open Text and Celestica
Assuming the 90 days trading horizon Open Text is expected to generate 10.04 times less return on investment than Celestica. But when comparing it to its historical volatility, Open Text Corp is 1.66 times less risky than Celestica. It trades about 0.03 of its potential returns per unit of risk. Celestica is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,495 in Celestica on August 30, 2024 and sell it today you would earn a total of 10,175 from holding Celestica or generate 680.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Open Text Corp vs. Celestica
Performance |
| Timeline |
| Open Text Corp |
| Celestica |
Open Text and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Open Text and Celestica
The main advantage of trading using opposite Open Text and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Text position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.| Open Text vs. NorthWest Healthcare Properties | Open Text vs. Faction Investment Group | Open Text vs. Partners Value Investments | Open Text vs. Nova Leap Health |
| Celestica vs. Berkshire Hathaway CDR | Celestica vs. JPMorgan Chase Co | Celestica vs. Bank of America | Celestica vs. Alphabet Inc CDR |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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