Correlation Between Comtech Telecommunicatio and BK Technologies
Can any of the company-specific risk be diversified away by investing in both Comtech Telecommunicatio and BK Technologies 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 Comtech Telecommunicatio and BK Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comtech Telecommunications Corp and BK Technologies, you can compare the effects of market volatilities on Comtech Telecommunicatio and BK Technologies 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 Comtech Telecommunicatio with a short position of BK Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comtech Telecommunicatio and BK Technologies.
Diversification Opportunities for Comtech Telecommunicatio and BK Technologies
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Comtech and BKTI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and BK Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BK Technologies and Comtech Telecommunicatio 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 Comtech Telecommunications Corp are associated (or correlated) with BK Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BK Technologies has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and BK Technologies go up and down completely randomly.
Pair Corralation between Comtech Telecommunicatio and BK Technologies
Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the BK Technologies. In addition to that, Comtech Telecommunicatio is 1.86 times more volatile than BK Technologies. It trades about -0.11 of its total potential returns per unit of risk. BK Technologies is currently generating about -0.01 per unit of volatility. If you would invest 3,491 in BK Technologies on December 28, 2024 and sell it today you would lose (291.00) from holding BK Technologies or give up 8.34% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Comtech Telecommunications Cor vs. BK Technologies
Performance |
Timeline |
Comtech Telecommunicatio |
BK Technologies |
Comtech Telecommunicatio and BK Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Comtech Telecommunicatio and BK Technologies
The main advantage of trading using opposite Comtech Telecommunicatio and BK Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comtech Telecommunicatio position performs unexpectedly, BK Technologies 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 BK Technologies will offset losses from the drop in BK Technologies' long position.Comtech Telecommunicatio vs. ADTRAN Inc | Comtech Telecommunicatio vs. KVH Industries | Comtech Telecommunicatio vs. Telesat Corp | Comtech Telecommunicatio vs. Digi International |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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