Correlation Between ViaSat and EchoStar
Can any of the company-specific risk be diversified away by investing in both ViaSat 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 ViaSat and EchoStar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ViaSat Inc and EchoStar, you can compare the effects of market volatilities on ViaSat 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 ViaSat with a short position of EchoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ViaSat and EchoStar.
Diversification Opportunities for ViaSat and EchoStar
Modest diversification
The 3 months correlation between ViaSat and EchoStar is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding ViaSat Inc and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar and ViaSat 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 ViaSat Inc 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 ViaSat i.e., ViaSat and EchoStar go up and down completely randomly.
Pair Corralation between ViaSat and EchoStar
Given the investment horizon of 90 days ViaSat Inc is expected to under-perform the EchoStar. But the stock apears to be less risky and, when comparing its historical volatility, ViaSat Inc is 1.16 times less risky than EchoStar. The stock trades about -0.13 of its potential returns per unit of risk. The EchoStar is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,365 in EchoStar on January 23, 2024 and sell it today you would earn a total of 141.00 from holding EchoStar or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ViaSat Inc vs. EchoStar
Performance |
| Timeline |
| ViaSat Inc |
| EchoStar |
ViaSat and EchoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ViaSat and EchoStar
The main advantage of trading using opposite ViaSat and EchoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ViaSat 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.The idea behind ViaSat Inc and EchoStar 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.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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