Correlation Between SPECTRAL MEDICAL and F5 Networks

Can any of the company-specific risk be diversified away by investing in both SPECTRAL MEDICAL and F5 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 SPECTRAL MEDICAL and F5 Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPECTRAL MEDICAL and F5 Networks, you can compare the effects of market volatilities on SPECTRAL MEDICAL and F5 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 SPECTRAL MEDICAL with a short position of F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPECTRAL MEDICAL and F5 Networks.

Diversification Opportunities for SPECTRAL MEDICAL and F5 Networks

-0.7

Correlation Coefficient

SPECTRAL MEDICAL  F5 Networks

Excellent diversification

The 3 months correlation between SPECTRAL and FFV is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding SPECTRAL MEDICAL and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks and SPECTRAL MEDICAL 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 SPECTRAL MEDICAL are associated (or correlated) with F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of SPECTRAL MEDICAL i.e., SPECTRAL MEDICAL and F5 Networks go up and down completely randomly.

Pair Corralation between SPECTRAL MEDICAL and F5 Networks

Assuming the 90 days horizon SPECTRAL MEDICAL is expected to generate 3.26 times more return on investment than F5 Networks. However, SPECTRAL MEDICAL is 3.26 times more volatile than F5 Networks. It trades about 0.15 of its potential returns per unit of risk. F5 Networks is currently generating about 0.03 per unit of risk. If you would invest  34.00  in SPECTRAL MEDICAL on October 11, 2024 and sell it today you would earn a total of  3.00  from holding SPECTRAL MEDICAL or generate 8.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

SPECTRAL MEDICAL  vs.  F5 Networks

SPECTRAL MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPECTRAL MEDICAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SPECTRAL MEDICAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

F5 Networks

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in F5 Networks are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, F5 Networks reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPECTRAL MEDICAL and F5 Networks

The main advantage of trading using opposite SPECTRAL MEDICAL and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPECTRAL MEDICAL position performs unexpectedly, F5 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 F5 Networks will offset losses from the drop in F5 Networks' long position.

The idea behind SPECTRAL MEDICAL and F5 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.