Correlation Between Juniper Networks and Gilead Sciences
Can any of the company-specific risk be diversified away by investing in both Juniper Networks and Gilead Sciences 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 Gilead Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Juniper Networks and Gilead Sciences, you can compare the effects of market volatilities on Juniper Networks and Gilead Sciences 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 Gilead Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Juniper Networks and Gilead Sciences.
Diversification Opportunities for Juniper Networks and Gilead Sciences
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Juniper and Gilead is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and Gilead Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilead Sciences 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 Gilead Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilead Sciences has no effect on the direction of Juniper Networks i.e., Juniper Networks and Gilead Sciences go up and down completely randomly.
Pair Corralation between Juniper Networks and Gilead Sciences
Given the investment horizon of 90 days Juniper Networks is expected to generate 1.42 times more return on investment than Gilead Sciences. However, Juniper Networks is 1.42 times more volatile than Gilead Sciences. It trades about 0.15 of its potential returns per unit of risk. Gilead Sciences is currently generating about -0.06 per unit of risk. If you would invest 2,497 in Juniper Networks on January 18, 2024 and sell it today you would earn a total of 1,151 from holding Juniper Networks or generate 46.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Juniper Networks vs. Gilead Sciences
Performance |
Timeline |
Juniper Networks |
Gilead Sciences |
Juniper Networks and Gilead Sciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Juniper Networks and Gilead Sciences
The main advantage of trading using opposite Juniper Networks and Gilead Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Juniper Networks position performs unexpectedly, Gilead Sciences 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 Gilead Sciences will offset losses from the drop in Gilead Sciences' long position.Juniper Networks vs. Aquagold International | Juniper Networks vs. Thrivent High Yield | Juniper Networks vs. Morningstar Unconstrained Allocation | Juniper Networks vs. Via Renewables |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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