Correlation Between Mosaic and NETGEAR

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

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

Diversification Opportunities for Mosaic and NETGEAR

-0.43

Correlation Coefficient

Mosaic  NETGEAR

Very good diversification

The 3 months correlation between Mosaic and NETGEAR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Mosaic 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 The Mosaic 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 Mosaic i.e., Mosaic and NETGEAR go up and down completely randomly.

Pair Corralation between Mosaic and NETGEAR

Considering the 90-day investment horizon The Mosaic is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, The Mosaic is 1.09 times less risky than NETGEAR. The stock trades about -0.06 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,006  in NETGEAR on September 29, 2024 and sell it today you would earn a total of  808.00  from holding NETGEAR or generate 40.28% return on investment over 90 days.

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

The Mosaic  vs.  NETGEAR

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

NETGEAR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mosaic and NETGEAR

The main advantage of trading using opposite Mosaic and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mosaic 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 The Mosaic 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.