Correlation Between PLAYTIKA HOLDING and NetApp

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

By analyzing existing cross correlation between PLAYTIKA HOLDING DL 01 and NetApp Inc, you can compare the effects of market volatilities on PLAYTIKA HOLDING 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 PLAYTIKA HOLDING with a short position of NetApp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and NetApp.

Diversification Opportunities for PLAYTIKA HOLDING and NetApp

0.66

Correlation Coefficient

PLAYTIKA HOLDING  NetApp

Poor diversification

The 3 months correlation between PLAYTIKA and NetApp is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 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 PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and NetApp go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and NetApp

Assuming the 90 days horizon PLAYTIKA HOLDING is expected to generate 13.31 times less return on investment than NetApp. But when comparing it to its historical volatility, PLAYTIKA HOLDING DL 01 is 2.06 times less risky than NetApp. It trades about 0.03 of its potential returns per unit of risk. NetApp Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  10,978  in NetApp Inc on September 18, 2024 and sell it today you would earn a total of  1,230  from holding NetApp Inc or generate 11.2% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  NetApp Inc

PLAYTIKA HOLDING

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PLAYTIKA HOLDING reported solid returns over the last few months and may actually be approaching a breakup point.

NetApp Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PLAYTIKA HOLDING and NetApp

The main advantage of trading using opposite PLAYTIKA HOLDING and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.