Correlation Between Extreme Networks and Calix

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

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

Diversification Opportunities for Extreme Networks and Calix

0.5

Correlation Coefficient

Extreme Networks  Calix

Very weak diversification

The 3 months correlation between Extreme and Calix is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Extreme Networks and Calix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calix Inc and Extreme 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 Extreme Networks are associated (or correlated) with Calix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calix Inc has no effect on the direction of Extreme Networks i.e., Extreme Networks and Calix go up and down completely randomly.

Pair Corralation between Extreme Networks and Calix

Given the investment horizon of 90 days Extreme Networks is expected to generate 1.78 times less return on investment than Calix. In addition to that, Extreme Networks is 1.63 times more volatile than Calix Inc. It trades about 0.15 of its total potential returns per unit of risk. Calix Inc is currently generating about 0.44 per unit of volatility. If you would invest  3,052  in Calix Inc on March 12, 2024 and sell it today you would earn a total of  492.00  from holding Calix Inc or generate 16.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Extreme Networks  vs.  Calix Inc

Extreme Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Extreme Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Extreme Networks is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Calix Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calix Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Calix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Extreme Networks and Calix

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

The idea behind Extreme Networks and Calix Inc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.