Correlation Between Ciena Corp and EchoStar
Can any of the company-specific risk be diversified away by investing in both Ciena Corp and EchoStar 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 Ciena Corp and EchoStar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ciena Corp and EchoStar, you can compare the effects of market volatilities on Ciena Corp and EchoStar 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 Ciena Corp with a short position of EchoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ciena Corp and EchoStar.
Diversification Opportunities for Ciena Corp and EchoStar
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ciena and EchoStar is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ciena Corp and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar and Ciena Corp 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 Ciena Corp are associated (or correlated) with EchoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EchoStar has no effect on the direction of Ciena Corp i.e., Ciena Corp and EchoStar go up and down completely randomly.
Pair Corralation between Ciena Corp and EchoStar
Given the investment horizon of 90 days Ciena Corp is expected to generate 0.69 times more return on investment than EchoStar. However, Ciena Corp is 1.44 times less risky than EchoStar. It trades about -0.01 of its potential returns per unit of risk. EchoStar is currently generating about -0.01 per unit of risk. If you would invest 5,745 in Ciena Corp on January 24, 2024 and sell it today you would lose (1,353) from holding Ciena Corp or give up 23.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ciena Corp vs. EchoStar
Performance |
| Timeline |
| Ciena Corp |
| EchoStar |
Ciena Corp and EchoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ciena Corp and EchoStar
The main advantage of trading using opposite Ciena Corp and EchoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ciena Corp position performs unexpectedly, EchoStar 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 EchoStar will offset losses from the drop in EchoStar's long position.| Ciena Corp vs. Desktop Metal | Ciena Corp vs. Fabrinet | Ciena Corp vs. Kimball Electronics | Ciena Corp vs. Knowles Cor |
| EchoStar vs. Desktop Metal | EchoStar vs. Fabrinet | EchoStar vs. Kimball Electronics | EchoStar vs. Knowles Cor |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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