Correlation Between EchoStar and Infinera
Can any of the company-specific risk be diversified away by investing in both EchoStar and Infinera 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 Infinera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EchoStar and Infinera, you can compare the effects of market volatilities on EchoStar and Infinera 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 Infinera. Check out your portfolio center. Please also check ongoing floating volatility patterns of EchoStar and Infinera.
Diversification Opportunities for EchoStar and Infinera
Very poor diversification
The 3 months correlation between EchoStar and Infinera is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding EchoStar and Infinera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinera 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 Infinera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinera has no effect on the direction of EchoStar i.e., EchoStar and Infinera go up and down completely randomly.
Pair Corralation between EchoStar and Infinera
Given the investment horizon of 90 days EchoStar is expected to generate 14.01 times more return on investment than Infinera. However, EchoStar is 14.01 times more volatile than Infinera. It trades about -0.01 of its potential returns per unit of risk. Infinera is currently generating about -0.26 per unit of risk. If you would invest 2,528 in EchoStar on August 28, 2024 and sell it today you would lose (87.00) from holding EchoStar or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EchoStar vs. Infinera
Performance |
| Timeline |
| EchoStar |
| Infinera |
EchoStar and Infinera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EchoStar and Infinera
The main advantage of trading using opposite EchoStar and Infinera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EchoStar position performs unexpectedly, Infinera 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 Infinera will offset losses from the drop in Infinera's long position.| EchoStar vs. ADTRAN Inc | EchoStar vs. Mynaric AG ADR | EchoStar vs. KVH Industries | EchoStar vs. Telesat Corp |
| Infinera vs. Ichor Holdings | Infinera vs. Fabrinet | Infinera vs. Hello Group | Infinera vs. Ultra Clean Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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