Correlation Between Juniper Networks and CME
Can any of the company-specific risk be diversified away by investing in both Juniper Networks and CME 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 Juniper Networks and CME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Juniper Networks and CME Group, you can compare the effects of market volatilities on Juniper Networks and CME 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 Juniper Networks with a short position of CME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juniper Networks and CME.
Diversification Opportunities for Juniper Networks and CME
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Juniper and CME is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and CME Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CME Group and Juniper Networks 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 Juniper Networks are associated (or correlated) with CME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CME Group has no effect on the direction of Juniper Networks i.e., Juniper Networks and CME go up and down completely randomly.
Pair Corralation between Juniper Networks and CME
Given the investment horizon of 90 days Juniper Networks is expected to under-perform the CME. But the stock apears to be less risky and, when comparing its historical volatility, Juniper Networks is 2.72 times less risky than CME. The stock trades about -0.39 of its potential returns per unit of risk. The CME Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 21,519 in CME Group on January 25, 2024 and sell it today you would earn a total of 158.00 from holding CME Group or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Juniper Networks vs. CME Group
Performance |
| Timeline |
| Juniper Networks |
| CME Group |
Juniper Networks and CME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Juniper Networks and CME
The main advantage of trading using opposite Juniper Networks and CME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Juniper Networks position performs unexpectedly, CME 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 CME will offset losses from the drop in CME's long position.| Juniper Networks vs. Desktop Metal | Juniper Networks vs. Fabrinet | Juniper Networks vs. Kimball Electronics | Juniper Networks 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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