Correlation Between Spirent Communications and Deltex Medical
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and Deltex Medical 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 Deltex Medical 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 Deltex Medical Group, you can compare the effects of market volatilities on Spirent Communications and Deltex Medical 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 Deltex Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Deltex Medical.
Diversification Opportunities for Spirent Communications and Deltex Medical
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Spirent and Deltex is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Deltex Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltex Medical Group 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 Deltex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltex Medical Group has no effect on the direction of Spirent Communications i.e., Spirent Communications and Deltex Medical go up and down completely randomly.
Pair Corralation between Spirent Communications and Deltex Medical
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.07 times more return on investment than Deltex Medical. However, Spirent Communications plc is 14.27 times less risky than Deltex Medical. It trades about 0.3 of its potential returns per unit of risk. Deltex Medical Group is currently generating about -0.08 per unit of risk. If you would invest 17,400 in Spirent Communications plc on November 5, 2024 and sell it today you would earn a total of 1,080 from holding Spirent Communications plc or generate 6.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Deltex Medical Group
Performance |
| Timeline |
| Spirent Communications |
| Deltex Medical Group |
Spirent Communications and Deltex Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Deltex Medical
The main advantage of trading using opposite Spirent Communications and Deltex Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, Deltex Medical 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 Deltex Medical will offset losses from the drop in Deltex Medical's long position.| Spirent Communications vs. Fresenius Medical Care | Spirent Communications vs. Endeavour Mining Corp | Spirent Communications vs. Prosiebensat 1 Media | Spirent Communications vs. Silvercorp Metals |
| Deltex Medical vs. Smithson Investment Trust | Deltex Medical vs. LPKF Laser Electronics | Deltex Medical vs. Electronic Arts | Deltex Medical vs. Clean Power Hydrogen |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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