Correlation Between Spirent Communications and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and BE Semiconductor 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 Spirent Communications and BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and BE Semiconductor Industries, you can compare the effects of market volatilities on Spirent Communications and BE Semiconductor 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 Spirent Communications with a short position of BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and BE Semiconductor.
Diversification Opportunities for Spirent Communications and BE Semiconductor
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Spirent and 0XVE is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Spirent Communications i.e., Spirent Communications and BE Semiconductor go up and down completely randomly.
Pair Corralation between Spirent Communications and BE Semiconductor
Assuming the 90 days trading horizon Spirent Communications plc is expected to generate 0.25 times more return on investment than BE Semiconductor. However, Spirent Communications plc is 3.97 times less risky than BE Semiconductor. It trades about 0.15 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.15 per unit of risk. If you would invest 17,690 in Spirent Communications plc on December 30, 2024 and sell it today you would earn a total of 1,220 from holding Spirent Communications plc or generate 6.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Spirent Communications plc vs. BE Semiconductor Industries
Performance |
Timeline |
Spirent Communications |
BE Semiconductor Ind |
Spirent Communications and BE Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spirent Communications and BE Semiconductor
The main advantage of trading using opposite Spirent Communications and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.Spirent Communications vs. OptiBiotix Health Plc | Spirent Communications vs. PureTech Health plc | Spirent Communications vs. Compagnie Plastic Omnium | Spirent Communications vs. Martin Marietta Materials |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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