Correlation Between Stellar and Zebra Technologies
Can any of the company-specific risk be diversified away by investing in both Stellar and Zebra Technologies 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 Stellar and Zebra Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Zebra Technologies, you can compare the effects of market volatilities on Stellar and Zebra Technologies 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 Stellar with a short position of Zebra Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Zebra Technologies.
Diversification Opportunities for Stellar and Zebra Technologies
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stellar and Zebra is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Zebra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zebra Technologies and Stellar 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 Stellar are associated (or correlated) with Zebra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zebra Technologies has no effect on the direction of Stellar i.e., Stellar and Zebra Technologies go up and down completely randomly.
Pair Corralation between Stellar and Zebra Technologies
Assuming the 90 days trading horizon Stellar is expected to generate 4.27 times more return on investment than Zebra Technologies. However, Stellar is 4.27 times more volatile than Zebra Technologies. It trades about 0.13 of its potential returns per unit of risk. Zebra Technologies is currently generating about 0.14 per unit of risk. If you would invest 11.00 in Stellar on October 12, 2024 and sell it today you would earn a total of 28.00 from holding Stellar or generate 254.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 89.25% |
| Values | Daily Returns |
Stellar vs. Zebra Technologies
Performance |
| Timeline |
| Stellar |
| Zebra Technologies |
Stellar and Zebra Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Zebra Technologies
The main advantage of trading using opposite Stellar and Zebra Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Zebra Technologies 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 Zebra Technologies will offset losses from the drop in Zebra Technologies' long position.The idea behind Stellar and Zebra Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Zebra Technologies vs. Cisco Systems | Zebra Technologies vs. Motorola Solutions | Zebra Technologies vs. Nokia Oyj | Zebra Technologies vs. Intelbras SA |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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