Correlation Between Zebra Technologies and Viavi Solutions

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

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

Diversification Opportunities for Zebra Technologies and Viavi Solutions

-0.63

Correlation Coefficient

Zebra Technologies  Viavi Solutions

Excellent diversification

The 3 months correlation between Zebra and Viavi is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Zebra Technologies and Viavi Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viavi Solutions and Zebra Technologies 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 Zebra Technologies are associated (or correlated) with Viavi Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viavi Solutions has no effect on the direction of Zebra Technologies i.e., Zebra Technologies and Viavi Solutions go up and down completely randomly.

Pair Corralation between Zebra Technologies and Viavi Solutions

Given the investment horizon of 90 days Zebra Technologies is expected to generate 0.97 times more return on investment than Viavi Solutions. However, Zebra Technologies is 1.03 times less risky than Viavi Solutions. It trades about 0.1 of its potential returns per unit of risk. Viavi Solutions is currently generating about -0.33 per unit of risk. If you would invest  28,454  in Zebra Technologies on March 5, 2024 and sell it today you would earn a total of  2,780  from holding Zebra Technologies or generate 9.77% return on investment over 90 days.

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

Zebra Technologies  vs.  Viavi Solutions

Zebra Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zebra Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Zebra Technologies may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Viavi Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viavi Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in July 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Zebra Technologies and Viavi Solutions

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

The idea behind Zebra Technologies and Viavi Solutions 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.