Correlation Between Aduro Clean and NETGEAR

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

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

Diversification Opportunities for Aduro Clean and NETGEAR

-0.15

Correlation Coefficient

Aduro Clean  NETGEAR

Good diversification

The 3 months correlation between Aduro and NETGEAR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aduro Clean Technologies and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Aduro Clean 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 Aduro Clean Technologies are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Aduro Clean i.e., Aduro Clean and NETGEAR go up and down completely randomly.

Pair Corralation between Aduro Clean and NETGEAR

Given the investment horizon of 90 days Aduro Clean is expected to generate 1.29 times less return on investment than NETGEAR. In addition to that, Aduro Clean is 1.25 times more volatile than NETGEAR. It trades about 0.17 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.28 per unit of volatility. If you would invest  2,404  in NETGEAR on September 28, 2024 and sell it today you would earn a total of  379.50  from holding NETGEAR or generate 15.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Aduro Clean Technologies  vs.  NETGEAR

Aduro Clean Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

NETGEAR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aduro Clean and NETGEAR

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

The idea behind Aduro Clean Technologies and NETGEAR 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.