Correlation Between Hackett and Infinera

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

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

Diversification Opportunities for Hackett and Infinera

-0.8

Correlation Coefficient

Hackett  Infinera

Pay attention - limited upside

The 3 months correlation between Hackett and Infinera is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group and Infinera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinera and Hackett 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 The Hackett Group are associated (or correlated) with Infinera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinera has no effect on the direction of Hackett i.e., Hackett and Infinera go up and down completely randomly.

Pair Corralation between Hackett and Infinera

Given the investment horizon of 90 days The Hackett Group is expected to under-perform the Infinera. In addition to that, Hackett is 4.06 times more volatile than Infinera. It trades about -0.3 of its total potential returns per unit of risk. Infinera is currently generating about 0.02 per unit of volatility. If you would invest  660.00  in Infinera on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Infinera or generate 0.15% return on investment over 90 days.

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

The Hackett Group  vs.  Infinera

Hackett Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hackett Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Hackett unveiled solid returns over the last few months and may actually be approaching a breakup point.

Infinera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infinera has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Infinera is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hackett and Infinera

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

The idea behind The Hackett Group and Infinera 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.