Correlation Between TransAct Technologies and NetApp

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

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

Diversification Opportunities for TransAct Technologies and NetApp

0.18

Correlation Coefficient

TransAct Technologies  NetApp

Average diversification

The 3 months correlation between TransAct and NetApp is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding TransAct Technologies Incorpor and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and TransAct Technologies 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 TransAct Technologies Incorporated 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 TransAct Technologies i.e., TransAct Technologies and NetApp go up and down completely randomly.

Pair Corralation between TransAct Technologies and NetApp

Given the investment horizon of 90 days TransAct Technologies Incorporated is expected to generate 0.66 times more return on investment than NetApp. However, TransAct Technologies Incorporated is 1.52 times less risky than NetApp. It trades about -0.16 of its potential returns per unit of risk. NetApp Inc is currently generating about -0.11 per unit of risk. If you would invest  425.00  in TransAct Technologies Incorporated on September 24, 2024 and sell it today you would lose (24.50) from holding TransAct Technologies Incorporated or give up 5.76% of portfolio value over 90 days.

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

TransAct Technologies Incorpor  vs.  NetApp Inc

TransAct Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransAct Technologies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NetApp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NetApp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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 TransAct Technologies and NetApp

The main advantage of trading using opposite TransAct Technologies and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAct Technologies 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 TransAct Technologies Incorporated 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.