Correlation Between Ciena Corp and Clearfield

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

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

Diversification Opportunities for Ciena Corp and Clearfield

0.47

Correlation Coefficient

Ciena Corp  Clearfield

Very weak diversification

The 3 months correlation between Ciena and Clearfield is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ciena Corp and Clearfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearfield and Ciena Corp 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 Ciena Corp are associated (or correlated) with Clearfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearfield has no effect on the direction of Ciena Corp i.e., Ciena Corp and Clearfield go up and down completely randomly.

Pair Corralation between Ciena Corp and Clearfield

Given the investment horizon of 90 days Ciena Corp is expected to under-perform the Clearfield. In addition to that, Ciena Corp is 1.4 times more volatile than Clearfield. It trades about -0.02 of its total potential returns per unit of risk. Clearfield is currently generating about 0.05 per unit of volatility. If you would invest  3,100  in Clearfield on December 1, 2024 and sell it today you would earn a total of  141.00  from holding Clearfield or generate 4.55% return on investment over 90 days.

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

Ciena Corp  vs.  Clearfield

Ciena Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ciena Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Ciena Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Clearfield

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clearfield are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Clearfield may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ciena Corp and Clearfield

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

The idea behind Ciena Corp and Clearfield 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.