Correlation Between NETGEAR and Comtech Telecommunicatio

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

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

Diversification Opportunities for NETGEAR and Comtech Telecommunicatio

-0.21

Correlation Coefficient

NETGEAR  Comtech Telecommunicatio

Very good diversification

The 3 months correlation between NETGEAR and Comtech is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio and NETGEAR 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 NETGEAR are associated (or correlated) with Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of NETGEAR i.e., NETGEAR and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between NETGEAR and Comtech Telecommunicatio

Given the investment horizon of 90 days NETGEAR is expected to generate 0.64 times more return on investment than Comtech Telecommunicatio. However, NETGEAR is 1.55 times less risky than Comtech Telecommunicatio. It trades about 0.16 of its potential returns per unit of risk. Comtech Telecommunications Corp is currently generating about 0.07 per unit of risk. If you would invest  1,632  in NETGEAR on August 31, 2024 and sell it today you would earn a total of  772.00  from holding NETGEAR or generate 47.3% return on investment over 90 days.

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

NETGEAR  vs.  Comtech Telecommunications Cor

NETGEAR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Comtech Telecommunicatio

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Comtech Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and Comtech Telecommunicatio

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

The idea behind NETGEAR and Comtech Telecommunications Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..