Correlation Between Doubledown Interactive and NETGEAR

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

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

Diversification Opportunities for Doubledown Interactive and NETGEAR

0.64

Correlation Coefficient

Doubledown Interactive  NETGEAR

Poor diversification

The 3 months correlation between Doubledown and NETGEAR is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Doubledown Interactive Co and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Doubledown Interactive 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 Doubledown Interactive Co 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 Doubledown Interactive i.e., Doubledown Interactive and NETGEAR go up and down completely randomly.

Pair Corralation between Doubledown Interactive and NETGEAR

Considering the 90-day investment horizon Doubledown Interactive Co is expected to generate 0.94 times more return on investment than NETGEAR. However, Doubledown Interactive Co is 1.06 times less risky than NETGEAR. It trades about -0.03 of its potential returns per unit of risk. NETGEAR is currently generating about -0.06 per unit of risk. If you would invest  1,055  in Doubledown Interactive Co on December 30, 2024 and sell it today you would lose (72.00) from holding Doubledown Interactive Co or give up 6.82% of portfolio value over 90 days.

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

Doubledown Interactive Co  vs.  NETGEAR

Doubledown Interactive

Risk-Adjusted Performance

Very Weak

Over the last 90 days Doubledown Interactive Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Doubledown Interactive is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 inconsistent 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 Doubledown Interactive and NETGEAR

The main advantage of trading using opposite Doubledown Interactive and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doubledown Interactive 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 Doubledown Interactive Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.