Correlation Between Ciena Corp and EchoStar

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

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

Diversification Opportunities for Ciena Corp and EchoStar

0.07

Correlation Coefficient

Ciena Corp  EchoStar

Significant diversification

The 3 months correlation between Ciena and EchoStar is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ciena Corp and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar 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 EchoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EchoStar has no effect on the direction of Ciena Corp i.e., Ciena Corp and EchoStar go up and down completely randomly.

Pair Corralation between Ciena Corp and EchoStar

Given the investment horizon of 90 days Ciena Corp is expected to under-perform the EchoStar. In addition to that, Ciena Corp is 1.53 times more volatile than EchoStar. It trades about -0.1 of its total potential returns per unit of risk. EchoStar is currently generating about 0.06 per unit of volatility. If you would invest  2,301  in EchoStar on December 29, 2024 and sell it today you would earn a total of  198.00  from holding EchoStar or generate 8.6% return on investment over 90 days.

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

Ciena Corp  vs.  EchoStar

Ciena Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ciena Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

EchoStar

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EchoStar are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, EchoStar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ciena Corp and EchoStar

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

The idea behind Ciena Corp and EchoStar 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.