Correlation Between Stratasys and Arista Networks
Can any of the company-specific risk be diversified away by investing in both Stratasys and Arista 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 Stratasys and Arista Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stratasys and Arista Networks, you can compare the effects of market volatilities on Stratasys and Arista 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 Stratasys with a short position of Arista Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratasys and Arista Networks.
Diversification Opportunities for Stratasys and Arista Networks
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stratasys and Arista is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and Arista Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arista Networks and Stratasys 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 Stratasys are associated (or correlated) with Arista Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arista Networks has no effect on the direction of Stratasys i.e., Stratasys and Arista Networks go up and down completely randomly.
Pair Corralation between Stratasys and Arista Networks
Given the investment horizon of 90 days Stratasys is expected to under-perform the Arista Networks. In addition to that, Stratasys is 1.35 times more volatile than Arista Networks. It trades about 0.0 of its total potential returns per unit of risk. Arista Networks is currently generating about 0.11 per unit of volatility. If you would invest 21,971 in Arista Networks on August 26, 2024 and sell it today you would earn a total of 18,677 from holding Arista Networks or generate 85.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stratasys vs. Arista Networks
Performance |
| Timeline |
| Stratasys |
| Arista Networks |
Stratasys and Arista Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stratasys and Arista Networks
The main advantage of trading using opposite Stratasys and Arista Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stratasys position performs unexpectedly, Arista 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 Arista Networks will offset losses from the drop in Arista Networks' long position.| Stratasys vs. Nano Dimension | Stratasys vs. IONQ Inc | Stratasys vs. D Wave Quantum | Stratasys vs. Desktop Metal |
| Arista Networks vs. IONQ Inc | Arista Networks vs. Cricut Inc | Arista Networks vs. Desktop Metal | Arista Networks vs. D Wave Quantum |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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