Correlation Between F5 Networks and EchoStar

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

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

Diversification Opportunities for F5 Networks and EchoStar

-0.84

Correlation Coefficient

F5 Networks  EchoStar

Pay attention - limited upside

The 3 months correlation between FFIV and EchoStar is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding F5 Networks and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar and F5 Networks 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 F5 Networks are associated (or correlated) with EchoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EchoStar has no effect on the direction of F5 Networks i.e., F5 Networks and EchoStar go up and down completely randomly.

Pair Corralation between F5 Networks and EchoStar

Given the investment horizon of 90 days F5 Networks is expected to under-perform the EchoStar. But the stock apears to be less risky and, when comparing its historical volatility, F5 Networks is 3.55 times less risky than EchoStar. The stock trades about -0.22 of its potential returns per unit of risk. The EchoStar is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  1,545  in EchoStar on March 9, 2024 and sell it today you would earn a total of  336.00  from holding EchoStar or generate 21.75% return on investment over 90 days.

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

F5 Networks  vs.  EchoStar

F5 Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days F5 Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward 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.

EchoStar

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EchoStar are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, EchoStar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with F5 Networks and EchoStar

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

The idea behind F5 Networks and EchoStar 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 Commodity Directory module to find actively traded commodities issued by global exchanges.