Correlation Between CommScope Holding and Edgewater Wireless

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

By analyzing existing cross correlation between CommScope Holding Co and Edgewater Wireless Systems, you can compare the effects of market volatilities on CommScope Holding and Edgewater Wireless 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 CommScope Holding with a short position of Edgewater Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of CommScope Holding and Edgewater Wireless.

Diversification Opportunities for CommScope Holding and Edgewater Wireless

-0.18

Correlation Coefficient

CommScope Holding  Edgewater Wireless

Good diversification

The 3 months correlation between CommScope and Edgewater is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding CommScope Holding Co and Edgewater Wireless Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewater Wireless and CommScope Holding 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 CommScope Holding Co are associated (or correlated) with Edgewater Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewater Wireless has no effect on the direction of CommScope Holding i.e., CommScope Holding and Edgewater Wireless go up and down completely randomly.

Pair Corralation between CommScope Holding and Edgewater Wireless

Given the investment horizon of 90 days CommScope Holding is expected to generate 5.27 times less return on investment than Edgewater Wireless. But when comparing it to its historical volatility, CommScope Holding Co is 2.09 times less risky than Edgewater Wireless. It trades about 0.03 of its potential returns per unit of risk. Edgewater Wireless Systems is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.97  in Edgewater Wireless Systems on December 30, 2024 and sell it today you would earn a total of  0.73  from holding Edgewater Wireless Systems or generate 18.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CommScope Holding Co  vs.  Edgewater Wireless Systems

CommScope Holding

Risk-Adjusted Performance

Weak

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

Edgewater Wireless

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edgewater Wireless Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Edgewater Wireless reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CommScope Holding and Edgewater Wireless

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

The idea behind CommScope Holding Co and Edgewater Wireless Systems 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.