Correlation Between NETGEAR and Mill City

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

By analyzing existing cross correlation between NETGEAR and Mill City Ventures, you can compare the effects of market volatilities on NETGEAR and Mill City 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 Mill City. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Mill City.

Diversification Opportunities for NETGEAR and Mill City

-0.47

Correlation Coefficient

NETGEAR  Mill City

Very good diversification

The 3 months correlation between NETGEAR and Mill is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Mill City Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mill City Ventures 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 Mill City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mill City Ventures has no effect on the direction of NETGEAR i.e., NETGEAR and Mill City go up and down completely randomly.

Pair Corralation between NETGEAR and Mill City

Given the investment horizon of 90 days NETGEAR is expected to generate 0.67 times more return on investment than Mill City. However, NETGEAR is 1.5 times less risky than Mill City. It trades about 0.23 of its potential returns per unit of risk. Mill City Ventures is currently generating about -0.1 per unit of risk. If you would invest  2,007  in NETGEAR on September 23, 2024 and sell it today you would earn a total of  793.00  from holding NETGEAR or generate 39.51% return on investment over 90 days.

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

NETGEAR  vs.  Mill City Ventures

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.

Mill City Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mill City Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NETGEAR and Mill City

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

The idea behind NETGEAR and Mill City Ventures 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.