Correlation Between ADTRAN and PWFL Old

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

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

Diversification Opportunities for ADTRAN and PWFL Old

0.18

Correlation Coefficient

ADTRAN  PWFL Old

Average diversification

The 3 months correlation between ADTRAN and PWFL is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and PWFL Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PWFL Old and ADTRAN 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 ADTRAN Inc are associated (or correlated) with PWFL Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PWFL Old has no effect on the direction of ADTRAN i.e., ADTRAN and PWFL Old go up and down completely randomly.

Pair Corralation between ADTRAN and PWFL Old

If you would invest  867.00  in ADTRAN Inc on October 12, 2024 and sell it today you would earn a total of  182.00  from holding ADTRAN Inc or generate 20.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

ADTRAN Inc  vs.  PWFL Old

ADTRAN Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ADTRAN Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ADTRAN displayed solid returns over the last few months and may actually be approaching a breakup point.

PWFL Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PWFL Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, PWFL Old is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ADTRAN and PWFL Old

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

The idea behind ADTRAN Inc and PWFL Old 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.