Correlation Between Comtech Telecommunicatio and Xtrackers California

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Can any of the company-specific risk be diversified away by investing in both Comtech Telecommunicatio and Xtrackers California 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 Comtech Telecommunicatio and Xtrackers California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comtech Telecommunications Corp and Xtrackers California Municipal, you can compare the effects of market volatilities on Comtech Telecommunicatio and Xtrackers California 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 Comtech Telecommunicatio with a short position of Xtrackers California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comtech Telecommunicatio and Xtrackers California.

Diversification Opportunities for Comtech Telecommunicatio and Xtrackers California

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Comtech and Xtrackers is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California and Comtech Telecommunicatio 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 Comtech Telecommunications Corp are associated (or correlated) with Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and Xtrackers California go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and Xtrackers California

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the Xtrackers California. In addition to that, Comtech Telecommunicatio is 80.33 times more volatile than Xtrackers California Municipal. It trades about -0.26 of its total potential returns per unit of risk. Xtrackers California Municipal is currently generating about 0.05 per unit of volatility. If you would invest  2,518  in Xtrackers California Municipal on December 29, 2023 and sell it today you would earn a total of  3.00  from holding Xtrackers California Municipal or generate 0.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Comtech Telecommunications Cor  vs.  Xtrackers California Municipal

 Performance 
       Timeline  
Comtech Telecommunicatio 

Risk-Adjusted Performance

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Over the last 90 days Comtech Telecommunications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Xtrackers California 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Xtrackers California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xtrackers California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Comtech Telecommunicatio and Xtrackers California Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Comtech Telecommunicatio and Xtrackers California

The main advantage of trading using opposite Comtech Telecommunicatio and Xtrackers California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comtech Telecommunicatio position performs unexpectedly, Xtrackers California 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 Xtrackers California will offset losses from the drop in Xtrackers California's long position.
The idea behind Comtech Telecommunications Corp and Xtrackers California Municipal 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.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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