Correlation Between ViaSat and ADTRAN

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

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

Diversification Opportunities for ViaSat and ADTRAN

-0.74

Correlation Coefficient

ViaSat  ADTRAN

Pay attention - limited upside

The 3 months correlation between ViaSat and ADTRAN is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding ViaSat Inc and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc and ViaSat 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 ViaSat Inc are associated (or correlated) with ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of ViaSat i.e., ViaSat and ADTRAN go up and down completely randomly.

Pair Corralation between ViaSat and ADTRAN

Given the investment horizon of 90 days ViaSat Inc is expected to under-perform the ADTRAN. In addition to that, ViaSat is 1.86 times more volatile than ADTRAN Inc. It trades about -0.21 of its total potential returns per unit of risk. ADTRAN Inc is currently generating about -0.11 per unit of volatility. If you would invest  865.00  in ADTRAN Inc on October 1, 2024 and sell it today you would lose (44.00) from holding ADTRAN Inc or give up 5.09% of portfolio value over 90 days.

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

ViaSat Inc  vs.  ADTRAN Inc

ViaSat Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ViaSat Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ADTRAN Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ADTRAN Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ADTRAN displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ViaSat and ADTRAN

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

The idea behind ViaSat Inc and ADTRAN Inc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.