Correlation Between Silicom and Extreme Networks
Can any of the company-specific risk be diversified away by investing in both Silicom and Extreme Networks 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 Silicom and Extreme Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicom and Extreme Networks, you can compare the effects of market volatilities on Silicom and Extreme Networks 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 Silicom with a short position of Extreme Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicom and Extreme Networks.
Diversification Opportunities for Silicom and Extreme Networks
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silicom and Extreme is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Silicom and Extreme Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extreme Networks and Silicom 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 Silicom are associated (or correlated) with Extreme Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extreme Networks has no effect on the direction of Silicom i.e., Silicom and Extreme Networks go up and down completely randomly.
Pair Corralation between Silicom and Extreme Networks
Given the investment horizon of 90 days Silicom is expected to generate 0.84 times more return on investment than Extreme Networks. However, Silicom is 1.18 times less risky than Extreme Networks. It trades about 0.0 of its potential returns per unit of risk. Extreme Networks is currently generating about -0.01 per unit of risk. If you would invest 1,500 in Silicom on August 24, 2024 and sell it today you would lose (78.00) from holding Silicom or give up 5.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicom vs. Extreme Networks
Performance |
| Timeline |
| Silicom |
| Extreme Networks |
Silicom and Extreme Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicom and Extreme Networks
The main advantage of trading using opposite Silicom and Extreme Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicom position performs unexpectedly, Extreme Networks 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 Extreme Networks will offset losses from the drop in Extreme Networks' long position.| Silicom vs. Ituran Location and | Silicom vs. Sapiens International | Silicom vs. Allot Communications | Silicom vs. Radcom |
| Extreme Networks vs. Eshallgo Class A | Extreme Networks vs. Amtech Systems | Extreme Networks vs. Gold Fields Ltd | Extreme Networks vs. Aegean Airlines SA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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