Correlation Between NETGEAR and Scottish Mortgage

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

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

Diversification Opportunities for NETGEAR and Scottish Mortgage

0.13

Correlation Coefficient

NETGEAR  Scottish Mortgage

Average diversification

The 3 months correlation between NETGEAR and Scottish is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage 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 Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of NETGEAR i.e., NETGEAR and Scottish Mortgage go up and down completely randomly.

Pair Corralation between NETGEAR and Scottish Mortgage

Given the investment horizon of 90 days NETGEAR is expected to under-perform the Scottish Mortgage. In addition to that, NETGEAR is 1.24 times more volatile than Scottish Mortgage Investment. It trades about -0.07 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.05 per unit of volatility. If you would invest  1,165  in Scottish Mortgage Investment on December 22, 2024 and sell it today you would earn a total of  57.00  from holding Scottish Mortgage Investment or generate 4.89% return on investment over 90 days.

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

NETGEAR  vs.  Scottish Mortgage Investment

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.

Scottish Mortgage

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottish Mortgage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NETGEAR and Scottish Mortgage

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

The idea behind NETGEAR and Scottish Mortgage Investment 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.