Correlation Between Arista Networks and Logitech International

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

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

Diversification Opportunities for Arista Networks and Logitech International

0.85

Correlation Coefficient

Arista Networks  Logitech International

Very poor diversification

The 3 months correlation between Arista and Logitech is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Arista Networks and Logitech International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logitech International and Arista 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 Arista Networks are associated (or correlated) with Logitech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logitech International has no effect on the direction of Arista Networks i.e., Arista Networks and Logitech International go up and down completely randomly.

Pair Corralation between Arista Networks and Logitech International

Given the investment horizon of 90 days Arista Networks is expected to generate 1.41 times more return on investment than Logitech International. However, Arista Networks is 1.41 times more volatile than Logitech International SA. It trades about 0.08 of its potential returns per unit of risk. Logitech International SA is currently generating about 0.04 per unit of risk. If you would invest  4,453  in Arista Networks on May 4, 2025 and sell it today you would earn a total of  7,304  from holding Arista Networks or generate 164.02% return on investment over 90 days.

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

Arista Networks  vs.  Logitech International SA

Arista Networks

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arista Networks are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Arista Networks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Logitech International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Logitech International SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Logitech International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arista Networks and Logitech International

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

The idea behind Arista Networks and Logitech International SA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.