Correlation Between ViaSat and Ubiquiti Networks

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

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

Diversification Opportunities for ViaSat and Ubiquiti Networks

0.91

Correlation Coefficient

ViaSat  Ubiquiti Networks

Almost no diversification

The 3 months correlation between ViaSat and Ubiquiti is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ViaSat Inc and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks and ViaSat 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 ViaSat Inc are associated (or correlated) with Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of ViaSat i.e., ViaSat and Ubiquiti Networks go up and down completely randomly.

Pair Corralation between ViaSat and Ubiquiti Networks

Given the investment horizon of 90 days ViaSat Inc is expected to under-perform the Ubiquiti Networks. In addition to that, ViaSat is 1.36 times more volatile than Ubiquiti Networks. It trades about -0.08 of its total potential returns per unit of risk. Ubiquiti Networks is currently generating about -0.1 per unit of volatility. If you would invest  11,329  in Ubiquiti Networks on January 25, 2024 and sell it today you would lose (725.00) from holding Ubiquiti Networks or give up 6.4% of portfolio value over 90 days.

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

ViaSat Inc  vs.  Ubiquiti Networks

ViaSat Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ViaSat Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ubiquiti Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubiquiti Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with ViaSat and Ubiquiti Networks

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

The idea behind ViaSat Inc and Ubiquiti Networks 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 Transaction History module to view history of all your transactions and understand their impact on performance.