Correlation Between Telefonaktiebolaget and Juniper Networks

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

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

Diversification Opportunities for Telefonaktiebolaget and Juniper Networks

-0.55

Correlation Coefficient

Telefonaktiebolaget  Juniper Networks

Excellent diversification

The 3 months correlation between Telefonaktiebolaget and Juniper is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Juniper Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juniper Networks and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson are associated (or correlated) with Juniper Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juniper Networks has no effect on the direction of Telefonaktiebolaget i.e., Telefonaktiebolaget and Juniper Networks go up and down completely randomly.

Pair Corralation between Telefonaktiebolaget and Juniper Networks

Given the investment horizon of 90 days Telefonaktiebolaget LM Ericsson is expected to under-perform the Juniper Networks. In addition to that, Telefonaktiebolaget is 1.13 times more volatile than Juniper Networks. It trades about -0.11 of its total potential returns per unit of risk. Juniper Networks is currently generating about 0.17 per unit of volatility. If you would invest  3,638  in Juniper Networks on May 6, 2025 and sell it today you would earn a total of  357.00  from holding Juniper Networks or generate 9.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	64.52%
Values	Daily Returns

Telefonaktiebolaget LM Ericsso  vs.  Juniper Networks

Telefonaktiebolaget

Risk-Adjusted Performance

Very Weak

Over the last 90 days Telefonaktiebolaget LM Ericsson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Juniper Networks

Risk-Adjusted Performance

Good

Over the last 90 days Juniper Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unfluctuating basic indicators, Juniper Networks reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telefonaktiebolaget and Juniper Networks

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

The idea behind Telefonaktiebolaget LM Ericsson and Juniper 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.