Correlation Between Spirent Communications and Power Of

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

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

Diversification Opportunities for Spirent Communications and Power Of

0.53

Correlation Coefficient

Spirent Communications  Power Of

Very weak diversification

The 3 months correlation between Spirent and Power is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Power of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Of and Spirent 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 Spirent Communications plc are associated (or correlated) with Power Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Of has no effect on the direction of Spirent Communications i.e., Spirent Communications and Power Of go up and down completely randomly.

Pair Corralation between Spirent Communications and Power Of

If you would invest (100.00) in Power of on December 10, 2024 and sell it today you would earn a total of  100.00  from holding Power of or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Spirent Communications plc  vs.  Power of

Spirent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spirent Communications plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Spirent Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Power Of

Risk-Adjusted Performance

OK

Over the last 90 days Power of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Power Of may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Spirent Communications and Power Of

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

The idea behind Spirent Communications plc and Power of 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.