Correlation Between Casa Systems and NETGEAR

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

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

Diversification Opportunities for Casa Systems and NETGEAR

0.0

Correlation Coefficient

Casa Systems  NETGEAR

Pay attention - limited upside

The 3 months correlation between Casa and NETGEAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Casa Systems and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Casa Systems 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 Casa Systems 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 Casa Systems i.e., Casa Systems and NETGEAR go up and down completely randomly.

Pair Corralation between Casa Systems and NETGEAR

If you would invest (100.00) in Casa Systems on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Casa Systems or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Casa Systems  vs.  NETGEAR

Casa Systems

Risk-Adjusted Performance

Very Weak

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

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Casa Systems and NETGEAR

The main advantage of trading using opposite Casa Systems and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Casa Systems 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 Casa Systems 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.