Correlation Between Abovenet Communications and Agency

Can any of the company-specific risk be diversified away by investing in both Abovenet Communications and Agency 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 Abovenet Communications and Agency into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abovenet Communications and Agency Com, you can compare the effects of market volatilities on Abovenet Communications and Agency 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 Abovenet Communications with a short position of Agency. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abovenet Communications and Agency.

Diversification Opportunities for Abovenet Communications and Agency

0.0

Correlation Coefficient

Abovenet Communications  Agency

Pay attention - limited upside

The 3 months correlation between Abovenet and Agency is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abovenet Communications and Agency Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agency Com and Abovenet Communications 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 Abovenet Communications are associated (or correlated) with Agency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agency Com has no effect on the direction of Abovenet Communications i.e., Abovenet Communications and Agency go up and down completely randomly.

Pair Corralation between Abovenet Communications and Agency

If you would invest (100.00) in Agency Com on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Agency Com or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Abovenet Communications  vs.  Agency Com

Abovenet Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abovenet Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Abovenet Communications is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Agency Com

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agency Com has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Agency is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Abovenet Communications and Agency

The main advantage of trading using opposite Abovenet Communications and Agency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abovenet Communications position performs unexpectedly, Agency 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 Agency will offset losses from the drop in Agency's long position.

The idea behind Abovenet Communications and Agency Com 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.