Correlation Between Ubiquiti Networks and Flex
Can any of the company-specific risk be diversified away by investing in both Ubiquiti Networks and Flex 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 Ubiquiti Networks and Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ubiquiti Networks and Flex, you can compare the effects of market volatilities on Ubiquiti Networks and Flex 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 Ubiquiti Networks with a short position of Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubiquiti Networks and Flex.
Diversification Opportunities for Ubiquiti Networks and Flex
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ubiquiti and Flex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and Ubiquiti Networks 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 Ubiquiti Networks are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and Flex go up and down completely randomly.
Pair Corralation between Ubiquiti Networks and Flex
Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 1.66 times less return on investment than Flex. But when comparing it to its historical volatility, Ubiquiti Networks is 1.46 times less risky than Flex. It trades about 0.08 of its potential returns per unit of risk. Flex is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,214 in Flex on September 2, 2024 and sell it today you would earn a total of 2,683 from holding Flex or generate 221.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ubiquiti Networks vs. Flex
Performance |
| Timeline |
| Ubiquiti Networks |
| Flex |
Ubiquiti Networks and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ubiquiti Networks and Flex
The main advantage of trading using opposite Ubiquiti Networks and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubiquiti Networks position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.| Ubiquiti Networks vs. Credo Technology Group | Ubiquiti Networks vs. Zebra Technologies | Ubiquiti Networks vs. Ciena Corp | Ubiquiti Networks vs. Clearfield |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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