Correlation Between F5 Networks and Nuvei Corp

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

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

Diversification Opportunities for F5 Networks and Nuvei Corp

0.85

Correlation Coefficient

F5 Networks  Nuvei Corp

Very poor diversification

The 3 months correlation between FFIV and Nuvei is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding F5 Networks and Nuvei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvei Corp 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 Nuvei Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvei Corp has no effect on the direction of F5 Networks i.e., F5 Networks and Nuvei Corp go up and down completely randomly.

Pair Corralation between F5 Networks and Nuvei Corp

Given the investment horizon of 90 days F5 Networks is expected to generate 1.02 times less return on investment than Nuvei Corp. But when comparing it to its historical volatility, F5 Networks is 2.39 times less risky than Nuvei Corp. It trades about 0.09 of its potential returns per unit of risk. Nuvei Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,483  in Nuvei Corp on September 19, 2024 and sell it today you would earn a total of  916.00  from holding Nuvei Corp or generate 36.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.97%
Values	Daily Returns

F5 Networks  vs.  Nuvei Corp

F5 Networks

Risk-Adjusted Performance

11 of 100

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.

Nuvei Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Nuvei Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Nuvei Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with F5 Networks and Nuvei Corp

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

The idea behind F5 Networks and Nuvei Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.