Correlation Between ADTRAN and AstroNova

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

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

Diversification Opportunities for ADTRAN and AstroNova

0.89

Correlation Coefficient

ADTRAN  AstroNova

Very poor diversification

The 3 months correlation between ADTRAN and AstroNova is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and AstroNova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstroNova and ADTRAN 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 ADTRAN Inc are associated (or correlated) with AstroNova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstroNova has no effect on the direction of ADTRAN i.e., ADTRAN and AstroNova go up and down completely randomly.

Pair Corralation between ADTRAN and AstroNova

Given the investment horizon of 90 days ADTRAN is expected to generate 2.26 times less return on investment than AstroNova. But when comparing it to its historical volatility, ADTRAN Inc is 1.28 times less risky than AstroNova. It trades about 0.07 of its potential returns per unit of risk. AstroNova is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  880.00  in AstroNova on May 5, 2025 and sell it today you would earn a total of  253.00  from holding AstroNova or generate 28.75% return on investment over 90 days.

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

ADTRAN Inc  vs.  AstroNova

ADTRAN Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADTRAN Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, ADTRAN displayed solid returns over the last few months and may actually be approaching a breakup point.

AstroNova

Risk-Adjusted Performance

OK

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

Pair Trading with ADTRAN and AstroNova

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

The idea behind ADTRAN Inc and AstroNova 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.