Cisco And Juniper: This Pair Trade Has More Alpha To Go
@Amazon has denied rumors of them entering the network switching industry, relieving pressure from both @Cisco and @Juniper.
Disappointing earnings from Juniper replaced the previous downward pressure from Amazon, sending the shares down over 7% on Friday.
Cisco continues to remain in a better position and investor should take a closer look heading into earnings next month.
This past week, JNPR reported relatively disappointing earnings which sent the shares down just shy of 10% on Friday. The entire tech sector was under pressure this past week thanks to extreme downward pressure on both Facebook (FB) and Twitter (TWTR). A majority of tech stocks I consistently follow were down 2-3% on Friday.
Earlier this month, there were a few rumors that Amazon (AMZN) was getting into the network switching business, placing downward pressure on Cisco (CSCO) and Juniper Networks (JNPR), among other competitors in the market. However, just this past week, news spread that Amazon was not looking to enter this market which let investors in both Cisco and Juniper breathe a little. Once the first rumors spread, I wrote an article which presented a rewarding pair trade opportunity based on the news: long CSCO and short JNPR. Since publishing this article, this pair trade has generated nearly 6% of alpha compared to the S&P 500, not a bad performance given the relative weakness in the tech sector.