Correlation Between Juniper Networks and Comtech Telecommunicatio

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

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

Diversification Opportunities for Juniper Networks and Comtech Telecommunicatio

0.31

Correlation Coefficient

Juniper Networks  Comtech Telecommunicatio

Weak diversification

The 3 months correlation between Juniper and Comtech is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio and Juniper 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 Juniper Networks are associated (or correlated) with Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of Juniper Networks i.e., Juniper Networks and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between Juniper Networks and Comtech Telecommunicatio

Given the investment horizon of 90 days Juniper Networks is expected to under-perform the Comtech Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, Juniper Networks is 8.49 times less risky than Comtech Telecommunicatio. The stock trades about -0.13 of its potential returns per unit of risk. The Comtech Telecommunications Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Comtech Telecommunications Corp on August 31, 2024 and sell it today you would earn a total of  46.00  from holding Comtech Telecommunications Corp or generate 15.13% return on investment over 90 days.

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

Juniper Networks  vs.  Comtech Telecommunications Cor

Juniper Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Juniper Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Comtech Telecommunicatio

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Comtech Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Juniper Networks and Comtech Telecommunicatio

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

The idea behind Juniper Networks and Comtech Telecommunications 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.