Correlation Between GREENLIGHT CAP and NetApp
Can any of the company-specific risk be diversified away by investing in both GREENLIGHT CAP and NetApp 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 GREENLIGHT CAP and NetApp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GREENLIGHT CAP RE and NetApp Inc, you can compare the effects of market volatilities on GREENLIGHT CAP and NetApp 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 GREENLIGHT CAP with a short position of NetApp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENLIGHT CAP and NetApp.
Diversification Opportunities for GREENLIGHT CAP and NetApp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GREENLIGHT and NetApp is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GREENLIGHT CAP RE and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and GREENLIGHT CAP 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 GREENLIGHT CAP RE are associated (or correlated) with NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of GREENLIGHT CAP i.e., GREENLIGHT CAP and NetApp go up and down completely randomly.
Pair Corralation between GREENLIGHT CAP and NetApp
Assuming the 90 days trading horizon GREENLIGHT CAP RE is expected to generate 0.83 times more return on investment than NetApp. However, GREENLIGHT CAP RE is 1.21 times less risky than NetApp. It trades about 0.06 of its potential returns per unit of risk. NetApp Inc is currently generating about 0.02 per unit of risk. If you would invest 1,250 in GREENLIGHT CAP RE on September 24, 2024 and sell it today you would earn a total of 80.00 from holding GREENLIGHT CAP RE or generate 6.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
GREENLIGHT CAP RE vs. NetApp Inc
Performance |
Timeline |
GREENLIGHT CAP RE |
NetApp Inc |
GREENLIGHT CAP and NetApp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GREENLIGHT CAP and NetApp
The main advantage of trading using opposite GREENLIGHT CAP and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENLIGHT CAP position performs unexpectedly, NetApp 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 NetApp will offset losses from the drop in NetApp's long position.GREENLIGHT CAP vs. COFCO Joycome Foods | GREENLIGHT CAP vs. Tower One Wireless | GREENLIGHT CAP vs. Ebro Foods SA | GREENLIGHT CAP vs. Astral Foods Limited |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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