Correlation Between NETGEAR and Bitcoin Depot

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

By analyzing existing cross correlation between NETGEAR and Bitcoin Depot, you can compare the effects of market volatilities on NETGEAR and Bitcoin Depot 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 Bitcoin Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Bitcoin Depot.

Diversification Opportunities for NETGEAR and Bitcoin Depot

0.14

Correlation Coefficient

NETGEAR  Bitcoin Depot

Average diversification

The 3 months correlation between NETGEAR and Bitcoin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Bitcoin Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Depot 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 Bitcoin Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Depot has no effect on the direction of NETGEAR i.e., NETGEAR and Bitcoin Depot go up and down completely randomly.

Pair Corralation between NETGEAR and Bitcoin Depot

Given the investment horizon of 90 days NETGEAR is expected to generate 0.56 times more return on investment than Bitcoin Depot. However, NETGEAR is 1.79 times less risky than Bitcoin Depot. It trades about 0.18 of its potential returns per unit of risk. Bitcoin Depot is currently generating about -0.07 per unit of risk. If you would invest  2,431  in NETGEAR on October 26, 2024 and sell it today you would earn a total of  390.00  from holding NETGEAR or generate 16.04% return on investment over 90 days.

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

NETGEAR  vs.  Bitcoin Depot

NETGEAR

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Depot

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Depot are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Bitcoin Depot displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and Bitcoin Depot

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

The idea behind NETGEAR and Bitcoin Depot 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.