Correlation Between Five9 and F5 Networks
Can any of the company-specific risk be diversified away by investing in both Five9 and F5 Networks 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 Five9 and F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five9 Inc and F5 Networks, you can compare the effects of market volatilities on Five9 and F5 Networks 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 Five9 with a short position of F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five9 and F5 Networks.
Diversification Opportunities for Five9 and F5 Networks
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Five9 and FFIV is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Five9 Inc and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks and Five9 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 Five9 Inc are associated (or correlated) with F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Five9 i.e., Five9 and F5 Networks go up and down completely randomly.
Pair Corralation between Five9 and F5 Networks
Given the investment horizon of 90 days Five9 is expected to generate 2.87 times less return on investment than F5 Networks. In addition to that, Five9 is 2.44 times more volatile than F5 Networks. It trades about 0.01 of its total potential returns per unit of risk. F5 Networks is currently generating about 0.09 per unit of volatility. If you would invest 14,265 in F5 Networks on January 19, 2024 and sell it today you would earn a total of 3,694 from holding F5 Networks or generate 25.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five9 Inc vs. F5 Networks
Performance |
| Timeline |
| Five9 Inc |
| F5 Networks |
Five9 and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five9 and F5 Networks
The main advantage of trading using opposite Five9 and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five9 position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.The idea behind Five9 Inc and F5 Networks 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.| F5 Networks vs. Zscaler | F5 Networks vs. Cloudflare | F5 Networks vs. Okta Inc | F5 Networks vs. Adobe Systems Incorporated |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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