Correlation Between Lindblad Expeditions and NETGEAR

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

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

Diversification Opportunities for Lindblad Expeditions and NETGEAR

0.76

Correlation Coefficient

Lindblad Expeditions  NETGEAR

Poor diversification

The 3 months correlation between Lindblad and NETGEAR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Lindblad Expeditions i.e., Lindblad Expeditions and NETGEAR go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and NETGEAR

Given the investment horizon of 90 days Lindblad Expeditions Holdings is expected to under-perform the NETGEAR. In addition to that, Lindblad Expeditions is 1.37 times more volatile than NETGEAR. It trades about -0.2 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.21 per unit of volatility. If you would invest  2,532  in NETGEAR on October 5, 2024 and sell it today you would earn a total of  255.00  from holding NETGEAR or generate 10.07% return on investment over 90 days.

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

Lindblad Expeditions Holdings  vs.  NETGEAR

Lindblad Expeditions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

NETGEAR

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lindblad Expeditions and NETGEAR

The main advantage of trading using opposite Lindblad Expeditions and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindblad Expeditions 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 Lindblad Expeditions Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.