Correlation Between Fossil and Akamai Technologies
Can any of the company-specific risk be diversified away by investing in both Fossil and Akamai 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 Fossil and Akamai Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fossil Group and Akamai Technologies, you can compare the effects of market volatilities on Fossil and Akamai 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 Fossil with a short position of Akamai Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fossil and Akamai Technologies.
Diversification Opportunities for Fossil and Akamai Technologies
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fossil and Akamai is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fossil Group and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies and Fossil 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 Fossil Group are associated (or correlated) with Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of Fossil i.e., Fossil and Akamai Technologies go up and down completely randomly.
Pair Corralation between Fossil and Akamai Technologies
Given the investment horizon of 90 days Fossil Group is expected to under-perform the Akamai Technologies. In addition to that, Fossil is 2.83 times more volatile than Akamai Technologies. It trades about -0.13 of its total potential returns per unit of risk. Akamai Technologies is currently generating about -0.2 per unit of volatility. If you would invest 12,366 in Akamai Technologies on January 25, 2024 and sell it today you would lose (2,190) from holding Akamai Technologies or give up 17.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fossil Group vs. Akamai Technologies
Performance |
| Timeline |
| Fossil Group |
| Akamai Technologies |
Fossil and Akamai Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fossil and Akamai Technologies
The main advantage of trading using opposite Fossil and Akamai Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fossil position performs unexpectedly, Akamai 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 Akamai Technologies will offset losses from the drop in Akamai Technologies' long position.The idea behind Fossil Group and Akamai 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.| Akamai Technologies vs. Crowdstrike Holdings | Akamai Technologies vs. Cloudflare | Akamai Technologies vs. Palo Alto Networks | Akamai Technologies vs. Zscaler |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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