Correlation Between Alector and Calix

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

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

Diversification Opportunities for Alector and Calix

0.42

Correlation Coefficient

Alector  Calix

Very weak diversification

The 3 months correlation between Alector and Calix is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alector and Calix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calix Inc and Alector 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 Alector are associated (or correlated) with Calix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calix Inc has no effect on the direction of Alector i.e., Alector and Calix go up and down completely randomly.

Pair Corralation between Alector and Calix

Given the investment horizon of 90 days Alector is expected to under-perform the Calix. In addition to that, Alector is 2.31 times more volatile than Calix Inc. It trades about -0.21 of its total potential returns per unit of risk. Calix Inc is currently generating about 0.0 per unit of volatility. If you would invest  3,607  in Calix Inc on September 14, 2024 and sell it today you would lose (93.00) from holding Calix Inc or give up 2.58% of portfolio value over 90 days.

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

Alector  vs.  Calix Inc

Alector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental 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.

Calix Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calix Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Calix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alector and Calix

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

The idea behind Alector and Calix 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.