Correlation Between NetApp and STRC Old

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

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

Diversification Opportunities for NetApp and STRC Old

-0.41

Correlation Coefficient

NetApp  STRC Old

Very good diversification

The 3 months correlation between NetApp and STRC is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and STRC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRC Old and NetApp 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 NetApp Inc are associated (or correlated) with STRC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRC Old has no effect on the direction of NetApp i.e., NetApp and STRC Old go up and down completely randomly.

Pair Corralation between NetApp and STRC Old

If you would invest  12,092  in NetApp Inc on September 13, 2024 and sell it today you would earn a total of  174.00  from holding NetApp Inc or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

NetApp Inc  vs.  STRC Old

NetApp Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, NetApp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

STRC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, STRC Old is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NetApp and STRC Old

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

The idea behind NetApp Inc and STRC Old 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.