Correlation Between NETGEAR and MYR

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

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

Diversification Opportunities for NETGEAR and MYR

0.7

Correlation Coefficient

NETGEAR  MYR

Poor diversification

The 3 months correlation between NETGEAR and MYR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group 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 MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of NETGEAR i.e., NETGEAR and MYR go up and down completely randomly.

Pair Corralation between NETGEAR and MYR

Given the investment horizon of 90 days NETGEAR is expected to under-perform the MYR. But the stock apears to be less risky and, when comparing its historical volatility, NETGEAR is 1.28 times less risky than MYR. The stock trades about -0.01 of its potential returns per unit of risk. The MYR Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,230  in MYR Group on October 25, 2024 and sell it today you would earn a total of  503.00  from holding MYR Group or generate 3.3% return on investment over 90 days.

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

NETGEAR  vs.  MYR Group

NETGEAR

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 21 (%) 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.

MYR Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and MYR

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

The idea behind NETGEAR and MYR Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.