Correlation Between Spirent Communications and AcadeMedia
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and AcadeMedia 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 Spirent Communications and AcadeMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and AcadeMedia AB, you can compare the effects of market volatilities on Spirent Communications and AcadeMedia 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 Spirent Communications with a short position of AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and AcadeMedia.
Diversification Opportunities for Spirent Communications and AcadeMedia
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and AcadeMedia is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Spirent Communications i.e., Spirent Communications and AcadeMedia go up and down completely randomly.
Pair Corralation between Spirent Communications and AcadeMedia
Assuming the 90 days trading horizon Spirent Communications plc is expected to under-perform the AcadeMedia. In addition to that, Spirent Communications is 2.39 times more volatile than AcadeMedia AB. It trades about -0.01 of its total potential returns per unit of risk. AcadeMedia AB is currently generating about 0.06 per unit of volatility. If you would invest 4,240 in AcadeMedia AB on August 25, 2024 and sell it today you would earn a total of 1,965 from holding AcadeMedia AB or generate 46.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Spirent Communications plc vs. AcadeMedia AB
Performance |
| Timeline |
| Spirent Communications |
| AcadeMedia AB |
Spirent Communications and AcadeMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and AcadeMedia
The main advantage of trading using opposite Spirent Communications and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, AcadeMedia 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 AcadeMedia will offset losses from the drop in AcadeMedia's long position.| Spirent Communications vs. Quadrise Plc | Spirent Communications vs. ImmuPharma PLC | Spirent Communications vs. Intuitive Investments Group | Spirent Communications vs. European Metals Holdings |
| AcadeMedia vs. Samsung Electronics Co | AcadeMedia vs. Samsung Electronics Co | AcadeMedia vs. Hyundai Motor | AcadeMedia vs. Toyota Motor Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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