Correlation Between Mayfair Gold and NETGEAR

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

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

Diversification Opportunities for Mayfair Gold and NETGEAR

0.32

Correlation Coefficient

Mayfair Gold  NETGEAR

Weak diversification

The 3 months correlation between Mayfair and NETGEAR is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mayfair Gold Corp and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Mayfair Gold 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 Mayfair Gold Corp 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 Mayfair Gold i.e., Mayfair Gold and NETGEAR go up and down completely randomly.

Pair Corralation between Mayfair Gold and NETGEAR

Assuming the 90 days horizon Mayfair Gold Corp is expected to generate 1.4 times more return on investment than NETGEAR. However, Mayfair Gold is 1.4 times more volatile than NETGEAR. It trades about 0.02 of its potential returns per unit of risk. NETGEAR is currently generating about -0.06 per unit of risk. If you would invest  117.00  in Mayfair Gold Corp on December 30, 2024 and sell it today you would earn a total of  1.00  from holding Mayfair Gold Corp or generate 0.85% return on investment over 90 days.

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

Mayfair Gold Corp  vs.  NETGEAR

Mayfair Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mayfair Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Mayfair Gold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Mayfair Gold and NETGEAR

The main advantage of trading using opposite Mayfair Gold and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayfair Gold 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 Mayfair Gold Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.