Correlation Between NETGEAR and Cresud SACIF

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

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

Diversification Opportunities for NETGEAR and Cresud SACIF

0.84

Correlation Coefficient

NETGEAR  Cresud SACIF

Very poor diversification

The 3 months correlation between NETGEAR and Cresud is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Cresud SACIF y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud SACIF y 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 Cresud SACIF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SACIF y has no effect on the direction of NETGEAR i.e., NETGEAR and Cresud SACIF go up and down completely randomly.

Pair Corralation between NETGEAR and Cresud SACIF

Given the investment horizon of 90 days NETGEAR is expected to generate 2.13 times less return on investment than Cresud SACIF. But when comparing it to its historical volatility, NETGEAR is 1.39 times less risky than Cresud SACIF. It trades about 0.18 of its potential returns per unit of risk. Cresud SACIF y is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  958.00  in Cresud SACIF y on October 7, 2024 and sell it today you would earn a total of  386.00  from holding Cresud SACIF y or generate 40.29% return on investment over 90 days.

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

NETGEAR  vs.  Cresud SACIF y

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 inconsistent technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Cresud SACIF y

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud SACIF y are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Cresud SACIF showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and Cresud SACIF

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

The idea behind NETGEAR and Cresud SACIF y 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.