Correlation Between EchoStar and Ciena Corp
Can any of the company-specific risk be diversified away by investing in both EchoStar 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 EchoStar and Ciena Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EchoStar and Ciena Corp, you can compare the effects of market volatilities on EchoStar 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 EchoStar with a short position of Ciena Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of EchoStar and Ciena Corp.
Diversification Opportunities for EchoStar and Ciena Corp
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EchoStar and Ciena is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding EchoStar and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and EchoStar 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 EchoStar 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 EchoStar i.e., EchoStar and Ciena Corp go up and down completely randomly.
Pair Corralation between EchoStar and Ciena Corp
Given the investment horizon of 90 days EchoStar is expected to under-perform the Ciena Corp. In addition to that, EchoStar is 2.02 times more volatile than Ciena Corp. It trades about -0.05 of its total potential returns per unit of risk. Ciena Corp is currently generating about 0.07 per unit of volatility. If you would invest 6,625 in Ciena Corp on August 24, 2024 and sell it today you would earn a total of 192.00 from holding Ciena Corp or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EchoStar vs. Ciena Corp
Performance |
| Timeline |
| EchoStar |
| Ciena Corp |
EchoStar and Ciena Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EchoStar and Ciena Corp
The main advantage of trading using opposite EchoStar and Ciena Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EchoStar 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.| EchoStar vs. Hewlett Packard Enterprise | EchoStar vs. Juniper Networks | EchoStar vs. Cisco Systems | EchoStar vs. Viavi Solutions |
| Ciena Corp vs. Hewlett Packard Enterprise | Ciena Corp vs. Juniper Networks | Ciena Corp vs. Cisco Systems | Ciena Corp vs. Viavi Solutions |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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