Correlation Between Ceragon Networks and American Funds

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

By analyzing existing cross correlation between Ceragon Networks and American Funds 2065, you can compare the effects of market volatilities on Ceragon Networks and American Funds 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 Ceragon Networks with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceragon Networks and American Funds.

Diversification Opportunities for Ceragon Networks and American Funds

0.5

Correlation Coefficient

Ceragon Networks  American Funds

Very weak diversification

The 3 months correlation between Ceragon and American is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ceragon Networks and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 and Ceragon Networks 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 Ceragon Networks are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2065 has no effect on the direction of Ceragon Networks i.e., Ceragon Networks and American Funds go up and down completely randomly.

Pair Corralation between Ceragon Networks and American Funds

Given the investment horizon of 90 days Ceragon Networks is expected to generate 7.49 times more return on investment than American Funds. However, Ceragon Networks is 7.49 times more volatile than American Funds 2065. It trades about 0.2 of its potential returns per unit of risk. American Funds 2065 is currently generating about 0.13 per unit of risk. If you would invest  276.00  in Ceragon Networks on September 12, 2024 and sell it today you would earn a total of  174.00  from holding Ceragon Networks or generate 63.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Ceragon Networks  vs.  American Funds 2065

Ceragon Networks

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ceragon Networks are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Ceragon Networks unveiled solid returns over the last few months and may actually be approaching a breakup point.

American Funds 2065

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds 2065 are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ceragon Networks and American Funds

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

The idea behind Ceragon Networks and American Funds 2065 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.