Correlation Between Intevac and ADTRAN

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

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

Diversification Opportunities for Intevac and ADTRAN

-0.8

Correlation Coefficient

Intevac  ADTRAN

Pay attention - limited upside

The 3 months correlation between Intevac and ADTRAN is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Intevac and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc and Intevac 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 Intevac are associated (or correlated) with ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of Intevac i.e., Intevac and ADTRAN go up and down completely randomly.

Pair Corralation between Intevac and ADTRAN

Given the investment horizon of 90 days Intevac is expected to under-perform the ADTRAN. But the stock apears to be less risky and, when comparing its historical volatility, Intevac is 1.29 times less risky than ADTRAN. The stock trades about -0.04 of its potential returns per unit of risk. The ADTRAN Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,980  in ADTRAN Inc on September 3, 2024 and sell it today you would lose (1,130) from holding ADTRAN Inc or give up 57.07% of portfolio value over 90 days.

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

Intevac  vs.  ADTRAN Inc

Intevac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intevac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ADTRAN Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ADTRAN Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ADTRAN displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intevac and ADTRAN

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

The idea behind Intevac and ADTRAN Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.