Correlation Between F5 Networks and Marqeta

Can any of the company-specific risk be diversified away by investing in both F5 Networks and Marqeta 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 F5 Networks and Marqeta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between F5 Networks and Marqeta, you can compare the effects of market volatilities on F5 Networks and Marqeta 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 F5 Networks with a short position of Marqeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of F5 Networks and Marqeta.

Diversification Opportunities for F5 Networks and Marqeta

-0.29

Correlation Coefficient

F5 Networks  Marqeta

Very good diversification

The 3 months correlation between FFIV and Marqeta is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding F5 Networks and Marqeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marqeta and F5 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 F5 Networks are associated (or correlated) with Marqeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marqeta has no effect on the direction of F5 Networks i.e., F5 Networks and Marqeta go up and down completely randomly.

Pair Corralation between F5 Networks and Marqeta

Given the investment horizon of 90 days F5 Networks is expected to generate 0.89 times more return on investment than Marqeta. However, F5 Networks is 1.12 times less risky than Marqeta. It trades about 0.15 of its potential returns per unit of risk. Marqeta is currently generating about -0.01 per unit of risk. If you would invest  25,007  in F5 Networks on November 27, 2024 and sell it today you would earn a total of  4,291  from holding F5 Networks or generate 17.16% return on investment over 90 days.

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

F5 Networks  vs.  Marqeta

F5 Networks

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in F5 Networks are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, F5 Networks showed solid returns over the last few months and may actually be approaching a breakup point.

Marqeta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marqeta has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Marqeta is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with F5 Networks and Marqeta

The main advantage of trading using opposite F5 Networks and Marqeta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F5 Networks position performs unexpectedly, Marqeta 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 Marqeta will offset losses from the drop in Marqeta's long position.

The idea behind F5 Networks and Marqeta 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.