Correlation Between Marchex and Celestica

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

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

Diversification Opportunities for Marchex and Celestica

0.52

Correlation Coefficient

Marchex  Celestica

Very weak diversification

The 3 months correlation between Marchex and Celestica is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Marchex 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 Marchex are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Marchex i.e., Marchex and Celestica go up and down completely randomly.

Pair Corralation between Marchex and Celestica

Given the investment horizon of 90 days Marchex is expected to generate 9.61 times less return on investment than Celestica. In addition to that, Marchex is 1.29 times more volatile than Celestica. It trades about 0.04 of its total potential returns per unit of risk. Celestica is currently generating about 0.51 per unit of volatility. If you would invest  9,825  in Celestica on October 26, 2024 and sell it today you would earn a total of  2,625  from holding Celestica or generate 26.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Marchex  vs.  Celestica

Marchex

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Celestica

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marchex and Celestica

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

The idea behind Marchex and Celestica 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.