Correlation Between Clearfield and Belden

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

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

Diversification Opportunities for Clearfield and Belden

-0.04

Correlation Coefficient

Clearfield  Belden

Good diversification

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

Pair Corralation between Clearfield and Belden

Given the investment horizon of 90 days Clearfield is expected to generate 1.87 times more return on investment than Belden. However, Clearfield is 1.87 times more volatile than Belden Inc. It trades about 0.05 of its potential returns per unit of risk. Belden Inc is currently generating about -0.13 per unit of risk. If you would invest  3,060  in Clearfield on November 29, 2024 and sell it today you would earn a total of  192.00  from holding Clearfield or generate 6.27% return on investment over 90 days.

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

Clearfield  vs.  Belden Inc

Clearfield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clearfield are ranked lower than 3 (%) 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 March 2025.

Belden Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Belden Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Clearfield and Belden

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

The idea behind Clearfield and Belden Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.