Correlation Between National Instruments and ADTRAN

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

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

Diversification Opportunities for National Instruments and ADTRAN

-0.75

Correlation Coefficient

National Instruments  ADTRAN

Pay attention - limited upside

The 3 months correlation between National and ADTRAN is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Instruments and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc and National Instruments 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 National Instruments are associated (or correlated) with ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of National Instruments i.e., National Instruments and ADTRAN go up and down completely randomly.

Pair Corralation between National Instruments and ADTRAN

If you would invest  5,998  in National Instruments on February 7, 2024 and sell it today you would earn a total of  0.00  from holding National Instruments or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

National Instruments  vs.  ADTRAN Inc

National Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, National Instruments is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

ADTRAN Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADTRAN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with National Instruments and ADTRAN

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

The idea behind National Instruments and ADTRAN 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.