Correlation Between Juniper Networks and Red Cat

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

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

Diversification Opportunities for Juniper Networks and Red Cat

0.42

Correlation Coefficient

Juniper Networks  Red Cat

Very weak diversification

The 3 months correlation between Juniper and Red is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and Red Cat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Cat Holdings 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 Red Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Cat Holdings has no effect on the direction of Juniper Networks i.e., Juniper Networks and Red Cat go up and down completely randomly.

Pair Corralation between Juniper Networks and Red Cat

Given the investment horizon of 90 days Juniper Networks is expected to generate 0.15 times more return on investment than Red Cat. However, Juniper Networks is 6.57 times less risky than Red Cat. It trades about -0.04 of its potential returns per unit of risk. Red Cat Holdings is currently generating about -0.12 per unit of risk. If you would invest  3,728  in Juniper Networks on December 27, 2024 and sell it today you would lose (114.00) from holding Juniper Networks or give up 3.06% of portfolio value over 90 days.

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

Juniper Networks  vs.  Red Cat Holdings

Juniper Networks

Risk-Adjusted Performance

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 relatively invariable basic indicators, Juniper Networks is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Red Cat Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Cat Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Juniper Networks and Red Cat

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

The idea behind Juniper Networks and Red Cat Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.