Correlation Between Avistar Communications and Viavi Solutions

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

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

Diversification Opportunities for Avistar Communications and Viavi Solutions

0.0

Correlation Coefficient

Avistar Communications  Viavi Solutions

Pay attention - limited upside

The 3 months correlation between Avistar and Viavi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Avistar Communications Corp and Viavi Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viavi Solutions and Avistar Communications 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 Avistar Communications Corp 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 Avistar Communications i.e., Avistar Communications and Viavi Solutions go up and down completely randomly.

Pair Corralation between Avistar Communications and Viavi Solutions

If you would invest  1,131  in Viavi Solutions on October 27, 2024 and sell it today you would lose (82.00) from holding Viavi Solutions or give up 7.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.48%
Values	Daily Returns

Avistar Communications Corp  vs.  Viavi Solutions

Avistar Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avistar Communications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Avistar Communications is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Viavi Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viavi Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Viavi Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avistar Communications and Viavi Solutions

The main advantage of trading using opposite Avistar Communications and Viavi Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avistar Communications 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 Avistar Communications Corp 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.