Correlation Between Armada Hflr and F5 Networks

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and F5 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 Armada Hflr and F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and F5 Networks, you can compare the effects of market volatilities on Armada Hflr and F5 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 Armada Hflr with a short position of F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and F5 Networks.

Diversification Opportunities for Armada Hflr and F5 Networks

-0.38

Correlation Coefficient

Armada Hflr  F5 Networks

Very good diversification

The 3 months correlation between Armada and FFV is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Armada Hflr i.e., Armada Hflr and F5 Networks go up and down completely randomly.

Pair Corralation between Armada Hflr and F5 Networks

Considering the 90-day investment horizon Armada Hflr is expected to generate 11.76 times less return on investment than F5 Networks. But when comparing it to its historical volatility, Armada Hflr Pr is 1.15 times less risky than F5 Networks. It trades about 0.01 of its potential returns per unit of risk. F5 Networks is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  13,232  in F5 Networks on September 28, 2024 and sell it today you would earn a total of  10,908  from holding F5 Networks or generate 82.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Armada Hflr Pr  vs.  F5 Networks

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

F5 Networks

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in F5 Networks are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, F5 Networks reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and F5 Networks

The main advantage of trading using opposite Armada Hflr and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, F5 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 F5 Networks will offset losses from the drop in F5 Networks' long position.

The idea behind Armada Hflr Pr and F5 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.