Correlation Between Juniper Networks and Extreme Networks

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

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

Diversification Opportunities for Juniper Networks and Extreme Networks

-0.17

Correlation Coefficient

Juniper Networks  Extreme Networks

Good diversification

The 3 months correlation between Juniper and Extreme is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and Extreme Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extreme Networks and Juniper 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 Juniper Networks are associated (or correlated) with Extreme Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extreme Networks has no effect on the direction of Juniper Networks i.e., Juniper Networks and Extreme Networks go up and down completely randomly.

Pair Corralation between Juniper Networks and Extreme Networks

Given the investment horizon of 90 days Juniper Networks is expected to generate 0.55 times more return on investment than Extreme Networks. However, Juniper Networks is 1.83 times less risky than Extreme Networks. It trades about 0.03 of its potential returns per unit of risk. Extreme Networks is currently generating about 0.0 per unit of risk. If you would invest  3,065  in Juniper Networks on August 27, 2024 and sell it today you would earn a total of  526.00  from holding Juniper Networks or generate 17.16% return on investment over 90 days.

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

Juniper Networks  vs.  Extreme Networks

Juniper Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Juniper Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Extreme Networks

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Extreme Networks are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Extreme Networks may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Juniper Networks and Extreme Networks

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

The idea behind Juniper Networks and Extreme 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.