Correlation Between CITGO and NETGEAR

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

By analyzing existing cross correlation between CITGO Petroleum 7 and NETGEAR, you can compare the effects of market volatilities on CITGO and NETGEAR 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 CITGO with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITGO and NETGEAR.

Diversification Opportunities for CITGO and NETGEAR

-0.02

Correlation Coefficient

CITGO  NETGEAR

Good diversification

The 3 months correlation between CITGO and NETGEAR is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CITGO Petroleum 7 and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and CITGO 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 CITGO Petroleum 7 are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of CITGO i.e., CITGO and NETGEAR go up and down completely randomly.

Pair Corralation between CITGO and NETGEAR

Assuming the 90 days trading horizon CITGO Petroleum 7 is expected to under-perform the NETGEAR. But the bond apears to be less risky and, when comparing its historical volatility, CITGO Petroleum 7 is 13.65 times less risky than NETGEAR. The bond trades about -0.01 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,017  in NETGEAR on September 25, 2024 and sell it today you would earn a total of  822.00  from holding NETGEAR or generate 40.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.31%
Values	Daily Returns

CITGO Petroleum 7  vs.  NETGEAR

CITGO Petroleum 7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITGO Petroleum 7 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITGO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

NETGEAR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 19 (%) 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.

Pair Trading with CITGO and NETGEAR

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

The idea behind CITGO Petroleum 7 and NETGEAR 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.