Correlation Between NETGEAR and Lionsgate Studios

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

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

Diversification Opportunities for NETGEAR and Lionsgate Studios

-0.06

Correlation Coefficient

NETGEAR  Lionsgate Studios

Good diversification

The 3 months correlation between NETGEAR and Lionsgate is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Lionsgate Studios Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionsgate Studios Corp 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 Lionsgate Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionsgate Studios Corp has no effect on the direction of NETGEAR i.e., NETGEAR and Lionsgate Studios go up and down completely randomly.

Pair Corralation between NETGEAR and Lionsgate Studios

Given the investment horizon of 90 days NETGEAR is expected to under-perform the Lionsgate Studios. But the stock apears to be less risky and, when comparing its historical volatility, NETGEAR is 1.19 times less risky than Lionsgate Studios. The stock trades about -0.07 of its potential returns per unit of risk. The Lionsgate Studios Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  703.00  in Lionsgate Studios Corp on December 22, 2024 and sell it today you would earn a total of  95.00  from holding Lionsgate Studios Corp or generate 13.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

NETGEAR  vs.  Lionsgate Studios Corp

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Lionsgate Studios Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lionsgate Studios Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Lionsgate Studios displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and Lionsgate Studios

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

The idea behind NETGEAR and Lionsgate Studios Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.