Correlation Between Spirent Communications and Centaur Media
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Centaur Media 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 Centaur Media 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 Centaur Media, you can compare the effects of market volatilities on Spirent Communications and Centaur Media 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 Centaur Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Centaur Media.
Diversification Opportunities for Spirent Communications and Centaur Media
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirent and Centaur is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Spirent Communications i.e., Spirent Communications and Centaur Media go up and down completely randomly.
Pair Corralation between Spirent Communications and Centaur Media
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.54 times more return on investment than Centaur Media. However, Spirent Communications plc is 1.84 times less risky than Centaur Media. It trades about 0.11 of its potential returns per unit of risk. Centaur Media is currently generating about -0.12 per unit of risk. If you would invest 16,800 in Spirent Communications plc on September 1, 2024 and sell it today you would earn a total of 330.00 from holding Spirent Communications plc or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Centaur Media
Performance |
| Timeline |
| Spirent Communications |
| Centaur Media |
Spirent Communications and Centaur Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Centaur Media
The main advantage of trading using opposite Spirent Communications and Centaur Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Centaur Media 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 Centaur Media will offset losses from the drop in Centaur Media's long position.| Spirent Communications vs. Gaztransport et Technigaz | Spirent Communications vs. United Airlines Holdings | Spirent Communications vs. Federal Realty Investment | Spirent Communications vs. Kaufman Et Broad |
| Centaur Media vs. X FAB Silicon Foundries | Centaur Media vs. Coor Service Management | Centaur Media vs. Hochschild Mining plc | Centaur Media vs. Universal Music Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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