Correlation Between VerifyMe and Extreme Networks

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

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

Diversification Opportunities for VerifyMe and Extreme Networks

-0.71

Correlation Coefficient

VerifyMe  Extreme Networks

Pay attention - limited upside

The 3 months correlation between VerifyMe and Extreme is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe and Extreme Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extreme Networks and VerifyMe 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 VerifyMe are associated (or correlated) with Extreme Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extreme Networks has no effect on the direction of VerifyMe i.e., VerifyMe and Extreme Networks go up and down completely randomly.

Pair Corralation between VerifyMe and Extreme Networks

Given the investment horizon of 90 days VerifyMe is expected to generate 2.99 times more return on investment than Extreme Networks. However, VerifyMe is 2.99 times more volatile than Extreme Networks. It trades about 0.17 of its potential returns per unit of risk. Extreme Networks is currently generating about -0.05 per unit of risk. If you would invest  119.00  in VerifyMe on February 14, 2024 and sell it today you would earn a total of  50.00  from holding VerifyMe or generate 42.02% return on investment over 90 days.

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

VerifyMe  vs.  Extreme Networks

VerifyMe

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VerifyMe are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, VerifyMe exhibited solid returns over the last few months and may actually be approaching a breakup point.

Extreme Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Extreme Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with VerifyMe and Extreme Networks

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

The idea behind VerifyMe and Extreme 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.