Correlation Between Knowles Cor and Juniper Networks

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

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

Diversification Opportunities for Knowles Cor and Juniper Networks

-0.47

Correlation Coefficient

Knowles Cor  Juniper Networks

Very good diversification

The 3 months correlation between Knowles and Juniper is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and Juniper Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Networks and Knowles Cor 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 Knowles Cor are associated (or correlated) with Juniper Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Networks has no effect on the direction of Knowles Cor i.e., Knowles Cor and Juniper Networks go up and down completely randomly.

Pair Corralation between Knowles Cor and Juniper Networks

Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 2.36 times more return on investment than Juniper Networks. However, Knowles Cor is 2.36 times more volatile than Juniper Networks. It trades about 0.09 of its potential returns per unit of risk. Juniper Networks is currently generating about -0.13 per unit of risk. If you would invest  1,739  in Knowles Cor on August 31, 2024 and sell it today you would earn a total of  185.00  from holding Knowles Cor or generate 10.64% return on investment over 90 days.

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

Knowles Cor  vs.  Juniper Networks

Knowles Cor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knowles Cor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Knowles Cor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 weak 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.

Pair Trading with Knowles Cor and Juniper Networks

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

The idea behind Knowles Cor and Juniper Networks 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.