Correlation Between Plexus Corp and ClearOne

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

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

Diversification Opportunities for Plexus Corp and ClearOne

-0.12

Correlation Coefficient

Plexus Corp  ClearOne

Good diversification

The 3 months correlation between Plexus and ClearOne is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and ClearOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearOne and Plexus Corp 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 Plexus Corp are associated (or correlated) with ClearOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearOne has no effect on the direction of Plexus Corp i.e., Plexus Corp and ClearOne go up and down completely randomly.

Pair Corralation between Plexus Corp and ClearOne

Given the investment horizon of 90 days Plexus Corp is expected to under-perform the ClearOne. But the stock apears to be less risky and, when comparing its historical volatility, Plexus Corp is 6.45 times less risky than ClearOne. The stock trades about -0.1 of its potential returns per unit of risk. The ClearOne is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  56.00  in ClearOne on October 7, 2024 and sell it today you would earn a total of  75.00  from holding ClearOne or generate 133.93% return on investment over 90 days.

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

Plexus Corp  vs.  ClearOne

Plexus Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plexus Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

ClearOne

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ClearOne are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, ClearOne displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Plexus Corp and ClearOne

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

The idea behind Plexus Corp and ClearOne 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.