Correlation Between Pure Storage and Fabrinet

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

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

Diversification Opportunities for Pure Storage and Fabrinet

0.71

Correlation Coefficient

Pure Storage  Fabrinet

Poor diversification

The 3 months correlation between Pure and Fabrinet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and Pure Storage 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 Pure Storage are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Pure Storage i.e., Pure Storage and Fabrinet go up and down completely randomly.

Pair Corralation between Pure Storage and Fabrinet

Given the investment horizon of 90 days Pure Storage is expected to generate 1.67 times less return on investment than Fabrinet. But when comparing it to its historical volatility, Pure Storage is 1.06 times less risky than Fabrinet. It trades about 0.17 of its potential returns per unit of risk. Fabrinet is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  22,090  in Fabrinet on May 3, 2025 and sell it today you would earn a total of  10,283  from holding Fabrinet or generate 46.55% return on investment over 90 days.

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

Pure Storage  vs.  Fabrinet

Pure Storage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

Fabrinet

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fabrinet are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fabrinet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pure Storage and Fabrinet

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

The idea behind Pure Storage and Fabrinet 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.