Correlation Between NETGEAR and BTC Digital

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Can any of the company-specific risk be diversified away by investing in both NETGEAR and BTC Digital 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 BTC Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and BTC Digital, you can compare the effects of market volatilities on NETGEAR and BTC Digital 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 BTC Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and BTC Digital.

Diversification Opportunities for NETGEAR and BTC Digital

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between NETGEAR and BTC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and BTC Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTC Digital 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 BTC Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTC Digital has no effect on the direction of NETGEAR i.e., NETGEAR and BTC Digital go up and down completely randomly.

Pair Corralation between NETGEAR and BTC Digital

Given the investment horizon of 90 days NETGEAR is expected to generate 410.82 times less return on investment than BTC Digital. But when comparing it to its historical volatility, NETGEAR is 8.14 times less risky than BTC Digital. It trades about 0.01 of its potential returns per unit of risk. BTC Digital is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  3.01  in BTC Digital on October 22, 2024 and sell it today you would earn a total of  3.80  from holding BTC Digital or generate 126.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

NETGEAR  vs.  BTC Digital

 Performance 
       Timeline  
NETGEAR 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 16 (%) 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.
BTC Digital 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BTC Digital are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, BTC Digital showed solid returns over the last few months and may actually be approaching a breakup point.

NETGEAR and BTC Digital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NETGEAR and BTC Digital

The main advantage of trading using opposite NETGEAR and BTC Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, BTC Digital 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 BTC Digital will offset losses from the drop in BTC Digital's long position.
The idea behind NETGEAR and BTC Digital 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.
Check out your portfolio center.
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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