Correlation Between Mitek Systems and Bandwidth

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

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

Diversification Opportunities for Mitek Systems and Bandwidth

0.72

Correlation Coefficient

Mitek Systems  Bandwidth

Poor diversification

The 3 months correlation between Mitek and Bandwidth is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mitek Systems and Bandwidth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bandwidth and Mitek Systems 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 Mitek Systems are associated (or correlated) with Bandwidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bandwidth has no effect on the direction of Mitek Systems i.e., Mitek Systems and Bandwidth go up and down completely randomly.

Pair Corralation between Mitek Systems and Bandwidth

Given the investment horizon of 90 days Mitek Systems is expected to generate 1.42 times less return on investment than Bandwidth. But when comparing it to its historical volatility, Mitek Systems is 1.75 times less risky than Bandwidth. It trades about 0.08 of its potential returns per unit of risk. Bandwidth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,249  in Bandwidth on May 2, 2025 and sell it today you would earn a total of  142.00  from holding Bandwidth or generate 11.37% return on investment over 90 days.

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

Mitek Systems  vs.  Bandwidth

Mitek Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitek Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Mitek Systems may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Bandwidth

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bandwidth are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Bandwidth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitek Systems and Bandwidth

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

The idea behind Mitek Systems and Bandwidth 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.