Correlation Between NETGEAR and NetMed

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

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

Diversification Opportunities for NETGEAR and NetMed

-0.33

Correlation Coefficient

NETGEAR  NetMed

Very good diversification

The 3 months correlation between NETGEAR and NetMed is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and NetMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetMed Inc 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 NetMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetMed Inc has no effect on the direction of NETGEAR i.e., NETGEAR and NetMed go up and down completely randomly.

Pair Corralation between NETGEAR and NetMed

If you would invest  2,136  in NETGEAR on September 15, 2024 and sell it today you would earn a total of  405.00  from holding NETGEAR or generate 18.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NETGEAR  vs.  NetMed Inc

NETGEAR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

NetMed Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NETGEAR and NetMed

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

The idea behind NETGEAR and NetMed Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.