Correlation Between Logitech International and NetApp

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

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

Diversification Opportunities for Logitech International and NetApp

0.27

Correlation Coefficient

Logitech International  NetApp

Modest diversification

The 3 months correlation between Logitech and NetApp is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Logitech International SA and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and Logitech International 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 Logitech International SA 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 Logitech International i.e., Logitech International and NetApp go up and down completely randomly.

Pair Corralation between Logitech International and NetApp

Given the investment horizon of 90 days Logitech International SA is expected to under-perform the NetApp. But the stock apears to be less risky and, when comparing its historical volatility, Logitech International SA is 1.11 times less risky than NetApp. The stock trades about -0.03 of its potential returns per unit of risk. The NetApp Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  11,545  in NetApp Inc on September 4, 2024 and sell it today you would earn a total of  784.00  from holding NetApp Inc or generate 6.79% return on investment over 90 days.

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

Logitech International SA  vs.  NetApp Inc

Logitech International

Risk-Adjusted Performance

0 of 100

Very Weak

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

NetApp Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, NetApp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Logitech International and NetApp

The main advantage of trading using opposite Logitech International and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logitech International 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 Logitech International SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.