Correlation Between Quantum and Ciena Corp
Can any of the company-specific risk be diversified away by investing in both Quantum and Ciena Corp 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 Quantum and Ciena Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantum and Ciena Corp, you can compare the effects of market volatilities on Quantum and Ciena Corp 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 Quantum with a short position of Ciena Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantum and Ciena Corp.
Diversification Opportunities for Quantum and Ciena Corp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quantum and Ciena is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and Quantum 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 Quantum are associated (or correlated) with Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Quantum i.e., Quantum and Ciena Corp go up and down completely randomly.
Pair Corralation between Quantum and Ciena Corp
Given the investment horizon of 90 days Quantum is expected to generate 8.77 times more return on investment than Ciena Corp. However, Quantum is 8.77 times more volatile than Ciena Corp. It trades about 0.03 of its potential returns per unit of risk. Ciena Corp is currently generating about 0.18 per unit of risk. If you would invest 4,492 in Quantum on October 25, 2024 and sell it today you would lose (916.00) from holding Quantum or give up 20.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quantum vs. Ciena Corp
Performance |
| Timeline |
| Quantum |
| Ciena Corp |
Quantum and Ciena Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quantum and Ciena Corp
The main advantage of trading using opposite Quantum and Ciena Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantum position performs unexpectedly, Ciena Corp 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 Ciena Corp will offset losses from the drop in Ciena Corp's long position.| Quantum vs. Rigetti Computing | Quantum vs. D Wave Quantum | Quantum vs. IONQ Inc | Quantum vs. Desktop Metal |
| Ciena Corp vs. Hewlett Packard Enterprise | Ciena Corp vs. Juniper Networks | Ciena Corp vs. Motorola Solutions | Ciena Corp vs. Cisco Systems |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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