Correlation Between Spirent Communications and MOWI ASA

Can any of the company-specific risk be diversified away by investing in both Spirent Communications and MOWI ASA 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 MOWI ASA 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 MOWI ASA SPADR, you can compare the effects of market volatilities on Spirent Communications and MOWI ASA 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 MOWI ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and MOWI ASA.

Diversification Opportunities for Spirent Communications and MOWI ASA

0.04

Correlation Coefficient

Spirent Communications  MOWI ASA

Significant diversification

The 3 months correlation between Spirent and MOWI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and MOWI ASA SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOWI ASA SPADR 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 MOWI ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOWI ASA SPADR has no effect on the direction of Spirent Communications i.e., Spirent Communications and MOWI ASA go up and down completely randomly.

Pair Corralation between Spirent Communications and MOWI ASA

Assuming the 90 days horizon Spirent Communications is expected to generate 2.59 times less return on investment than MOWI ASA. In addition to that, Spirent Communications is 1.41 times more volatile than MOWI ASA SPADR. It trades about 0.03 of its total potential returns per unit of risk. MOWI ASA SPADR is currently generating about 0.09 per unit of volatility. If you would invest  1,605  in MOWI ASA SPADR on December 21, 2024 and sell it today you would earn a total of  145.00  from holding MOWI ASA SPADR or generate 9.03% return on investment over 90 days.

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

Spirent Communications plc  vs.  MOWI ASA SPADR

Spirent Communications

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spirent Communications plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

MOWI ASA SPADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOWI ASA SPADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, MOWI ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Spirent Communications and MOWI ASA

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

The idea behind Spirent Communications plc and MOWI ASA SPADR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.