Correlation Between Inseego Corp and Extreme Networks

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

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

Diversification Opportunities for Inseego Corp and Extreme Networks

0.66

Correlation Coefficient

Inseego Corp  Extreme Networks

Poor diversification

The 3 months correlation between Inseego and Extreme is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Inseego Corp and Extreme Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extreme Networks and Inseego Corp 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 Inseego Corp 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 Inseego Corp i.e., Inseego Corp and Extreme Networks go up and down completely randomly.

Pair Corralation between Inseego Corp and Extreme Networks

Given the investment horizon of 90 days Inseego Corp is expected to generate 3.27 times less return on investment than Extreme Networks. In addition to that, Inseego Corp is 1.78 times more volatile than Extreme Networks. It trades about 0.16 of its total potential returns per unit of risk. Extreme Networks is currently generating about 0.91 per unit of volatility. If you would invest  1,111  in Extreme Networks on February 17, 2025 and sell it today you would earn a total of  511.00  from holding Extreme Networks or generate 45.99% return on investment over 90 days.

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

Inseego Corp  vs.  Extreme Networks

Inseego Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inseego Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Extreme Networks

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Extreme Networks are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Extreme Networks is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Inseego Corp and Extreme Networks

The main advantage of trading using opposite Inseego Corp and Extreme Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inseego Corp 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 Inseego Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.