Correlation Between Juniper Networks and NETGEAR

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

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

Diversification Opportunities for Juniper Networks and NETGEAR

0.21

Correlation Coefficient

Juniper Networks  NETGEAR

Modest diversification

The 3 months correlation between Juniper and NETGEAR is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Juniper Networks and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Juniper Networks 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 Juniper Networks 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 Juniper Networks i.e., Juniper Networks and NETGEAR go up and down completely randomly.

Pair Corralation between Juniper Networks and NETGEAR

Given the investment horizon of 90 days Juniper Networks is expected to generate 5.64 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Juniper Networks is 2.05 times less risky than NETGEAR. It trades about 0.02 of its potential returns per unit of risk. NETGEAR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,460  in NETGEAR on November 29, 2024 and sell it today you would earn a total of  134.00  from holding NETGEAR or generate 5.45% return on investment over 90 days.

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

Juniper Networks  vs.  NETGEAR

Juniper Networks

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Juniper Networks are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Juniper Networks is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

NETGEAR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Juniper Networks and NETGEAR

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