Correlation Between NETGEAR and Apogee Enterprises

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

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

Diversification Opportunities for NETGEAR and Apogee Enterprises

0.37

Correlation Coefficient

NETGEAR  Apogee Enterprises

Weak diversification

The 3 months correlation between NETGEAR and Apogee is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and NETGEAR 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 NETGEAR are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of NETGEAR i.e., NETGEAR and Apogee Enterprises go up and down completely randomly.

Pair Corralation between NETGEAR and Apogee Enterprises

Given the investment horizon of 90 days NETGEAR is expected to generate 1.76 times more return on investment than Apogee Enterprises. However, NETGEAR is 1.76 times more volatile than Apogee Enterprises. It trades about 0.32 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.57 per unit of risk. If you would invest  2,431  in NETGEAR on September 25, 2024 and sell it today you would earn a total of  408.00  from holding NETGEAR or generate 16.78% return on investment over 90 days.

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

NETGEAR  vs.  Apogee Enterprises

NETGEAR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 19 (%) 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.

Apogee Enterprises

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NETGEAR and Apogee Enterprises

The main advantage of trading using opposite NETGEAR and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.

The idea behind NETGEAR and Apogee Enterprises 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..