Correlation Between Cricut and Viavi Solutions

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

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

Diversification Opportunities for Cricut and Viavi Solutions

-0.68

Correlation Coefficient

Cricut  Viavi Solutions

Excellent diversification

The 3 months correlation between Cricut and Viavi is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cricut Inc and Viavi Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viavi Solutions and Cricut 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 Cricut Inc are associated (or correlated) with Viavi Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viavi Solutions has no effect on the direction of Cricut i.e., Cricut and Viavi Solutions go up and down completely randomly.

Pair Corralation between Cricut and Viavi Solutions

Given the investment horizon of 90 days Cricut Inc is expected to generate 2.73 times more return on investment than Viavi Solutions. However, Cricut is 2.73 times more volatile than Viavi Solutions. It trades about 0.09 of its potential returns per unit of risk. Viavi Solutions is currently generating about -0.16 per unit of risk. If you would invest  482.00  in Cricut Inc on March 4, 2024 and sell it today you would earn a total of  141.00  from holding Cricut Inc or generate 29.25% return on investment over 90 days.

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

Cricut Inc  vs.  Viavi Solutions

Cricut Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cricut Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, Cricut unveiled solid returns over the last few months and may actually be approaching a breakup point.

Viavi Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viavi Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in July 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Cricut and Viavi Solutions

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

The idea behind Cricut Inc and Viavi Solutions 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.