Correlation Between NETGEAR and Paysafe

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

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

Diversification Opportunities for NETGEAR and Paysafe

-0.31

Correlation Coefficient

NETGEAR  Paysafe

Very good diversification

The 3 months correlation between NETGEAR and Paysafe is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of NETGEAR i.e., NETGEAR and Paysafe go up and down completely randomly.

Pair Corralation between NETGEAR and Paysafe

Given the investment horizon of 90 days NETGEAR is expected to generate 1.14 times more return on investment than Paysafe. However, NETGEAR is 1.14 times more volatile than Paysafe. It trades about 0.16 of its potential returns per unit of risk. Paysafe is currently generating about -0.02 per unit of risk. If you would invest  1,632  in NETGEAR on August 31, 2024 and sell it today you would earn a total of  772.00  from holding NETGEAR or generate 47.3% return on investment over 90 days.

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

NETGEAR  vs.  Paysafe

NETGEAR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 12 (%) 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.

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Paysafe is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NETGEAR and Paysafe

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

The idea behind NETGEAR and Paysafe 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.