Correlation Between Intevac and Ribbon Communications

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

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

Diversification Opportunities for Intevac and Ribbon Communications

-0.6

Correlation Coefficient

Intevac  Ribbon Communications

Excellent diversification

The 3 months correlation between Intevac and Ribbon is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and Ribbon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ribbon Communications and Intevac 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 Intevac are associated (or correlated) with Ribbon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ribbon Communications has no effect on the direction of Intevac i.e., Intevac and Ribbon Communications go up and down completely randomly.

Pair Corralation between Intevac and Ribbon Communications

Given the investment horizon of 90 days Intevac is expected to under-perform the Ribbon Communications. In addition to that, Intevac is 1.33 times more volatile than Ribbon Communications. It trades about -0.1 of its total potential returns per unit of risk. Ribbon Communications is currently generating about 0.13 per unit of volatility. If you would invest  311.00  in Ribbon Communications on August 31, 2024 and sell it today you would earn a total of  65.00  from holding Ribbon Communications or generate 20.9% return on investment over 90 days.

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

Intevac  vs.  Ribbon Communications

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ribbon Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ribbon Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental drivers, Ribbon Communications displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intevac and Ribbon Communications

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

The idea behind Intevac and Ribbon Communications 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.