Correlation Between NETGEAR and 53522KAB9

Can any of the company-specific risk be diversified away by investing in both NETGEAR and 53522KAB9 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 53522KAB9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NETGEAR and LIN 47 05 DEC 25, you can compare the effects of market volatilities on NETGEAR and 53522KAB9 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 53522KAB9. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and 53522KAB9.

Diversification Opportunities for NETGEAR and 53522KAB9

-0.61

Correlation Coefficient

NETGEAR  53522KAB9

Excellent diversification

The 3 months correlation between NETGEAR and 53522KAB9 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and LIN 47 05 DEC 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIN 47 05 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 53522KAB9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIN 47 05 has no effect on the direction of NETGEAR i.e., NETGEAR and 53522KAB9 go up and down completely randomly.

Pair Corralation between NETGEAR and 53522KAB9

Given the investment horizon of 90 days NETGEAR is expected to generate 13.22 times more return on investment than 53522KAB9. However, NETGEAR is 13.22 times more volatile than LIN 47 05 DEC 25. It trades about 0.08 of its potential returns per unit of risk. LIN 47 05 DEC 25 is currently generating about 0.01 per unit of risk. If you would invest  1,267  in NETGEAR on September 12, 2024 and sell it today you would earn a total of  1,259  from holding NETGEAR or generate 99.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.56%
Values	Daily Returns

NETGEAR  vs.  LIN 47 05 DEC 25

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 unsteady technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

LIN 47 05

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LIN 47 05 DEC 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 53522KAB9 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NETGEAR and 53522KAB9

The main advantage of trading using opposite NETGEAR and 53522KAB9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, 53522KAB9 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 53522KAB9 will offset losses from the drop in 53522KAB9's long position.

The idea behind NETGEAR and LIN 47 05 DEC 25 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.