Correlation Between SPS Commerce and F5 Networks
Can any of the company-specific risk be diversified away by investing in both SPS Commerce and F5 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 SPS Commerce and F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPS Commerce and F5 Networks, you can compare the effects of market volatilities on SPS Commerce and F5 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 SPS Commerce with a short position of F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPS Commerce and F5 Networks.
Diversification Opportunities for SPS Commerce and F5 Networks
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPS and FFIV is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SPS Commerce and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks and SPS Commerce 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 SPS Commerce are associated (or correlated) with F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of SPS Commerce i.e., SPS Commerce and F5 Networks go up and down completely randomly.
Pair Corralation between SPS Commerce and F5 Networks
Given the investment horizon of 90 days SPS Commerce is expected to generate 368.3 times less return on investment than F5 Networks. In addition to that, SPS Commerce is 1.36 times more volatile than F5 Networks. It trades about 0.0 of its total potential returns per unit of risk. F5 Networks is currently generating about 0.23 per unit of volatility. If you would invest 19,889 in F5 Networks on August 28, 2024 and sell it today you would earn a total of 4,985 from holding F5 Networks or generate 25.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPS Commerce vs. F5 Networks
Performance |
| Timeline |
| SPS Commerce |
| F5 Networks |
SPS Commerce and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPS Commerce and F5 Networks
The main advantage of trading using opposite SPS Commerce and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPS Commerce position performs unexpectedly, F5 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 F5 Networks will offset losses from the drop in F5 Networks' long position.The idea behind SPS Commerce and F5 Networks pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| F5 Networks vs. Ichor Holdings | F5 Networks vs. Fabrinet | F5 Networks vs. Hello Group | F5 Networks 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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