Correlation Between Coherent and Ciena Corp

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

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

Diversification Opportunities for Coherent and Ciena Corp

0.82

Correlation Coefficient

Coherent  Ciena Corp

Very poor diversification

The 3 months correlation between Coherent and Ciena is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Coherent and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and Coherent 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 Coherent are associated (or correlated) with Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Coherent i.e., Coherent and Ciena Corp go up and down completely randomly.

Pair Corralation between Coherent and Ciena Corp

Given the investment horizon of 90 days Coherent is expected to generate 1.05 times more return on investment than Ciena Corp. However, Coherent is 1.05 times more volatile than Ciena Corp. It trades about 0.27 of its potential returns per unit of risk. Ciena Corp is currently generating about 0.16 per unit of risk. If you would invest  6,962  in Coherent on May 7, 2025 and sell it today you would earn a total of  3,712  from holding Coherent or generate 53.32% return on investment over 90 days.

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

Coherent  vs.  Ciena Corp

Coherent

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coherent are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Coherent reported solid returns over the last few months and may actually be approaching a breakup point.

Ciena Corp

Risk-Adjusted Performance

Good

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

Pair Trading with Coherent and Ciena Corp

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

The idea behind Coherent and Ciena Corp 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.