Correlation Between STRC Old and NetApp

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

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

Diversification Opportunities for STRC Old and NetApp

-0.41

Correlation Coefficient

STRC Old  NetApp

Very good diversification

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

Pair Corralation between STRC Old and NetApp

If you would invest  11,682  in NetApp Inc on September 13, 2024 and sell it today you would earn a total of  584.00  from holding NetApp Inc or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

STRC Old  vs.  NetApp Inc

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.

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.

Pair Trading with STRC Old and NetApp

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

The idea behind STRC Old and NetApp 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.