Correlation Between Pure Storage and Clearfield
Can any of the company-specific risk be diversified away by investing in both Pure Storage and Clearfield 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 Pure Storage and Clearfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and Clearfield, you can compare the effects of market volatilities on Pure Storage and Clearfield 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 Pure Storage with a short position of Clearfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Clearfield.
Diversification Opportunities for Pure Storage and Clearfield
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pure and Clearfield is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Clearfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearfield and Pure Storage 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 Pure Storage are associated (or correlated) with Clearfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearfield has no effect on the direction of Pure Storage i.e., Pure Storage and Clearfield go up and down completely randomly.
Pair Corralation between Pure Storage and Clearfield
Given the investment horizon of 90 days Pure Storage is expected to generate 1.17 times more return on investment than Clearfield. However, Pure Storage is 1.17 times more volatile than Clearfield. It trades about 0.03 of its potential returns per unit of risk. Clearfield is currently generating about -0.03 per unit of risk. If you would invest 5,206 in Pure Storage on January 31, 2024 and sell it today you would earn a total of 37.00 from holding Pure Storage or generate 0.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pure Storage vs. Clearfield
Performance |
Timeline |
Pure Storage |
Clearfield |
Pure Storage and Clearfield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pure Storage and Clearfield
The main advantage of trading using opposite Pure Storage and Clearfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage position performs unexpectedly, Clearfield 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 Clearfield will offset losses from the drop in Clearfield's long position.Pure Storage vs. LG Display Co | Pure Storage vs. Sony Corp | Pure Storage vs. Sonos Inc | Pure Storage vs. Vizio Holding Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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