Correlation Between NETGEAR and EMBARQ

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

By analyzing existing cross correlation between NETGEAR and EMBARQ P 7995, you can compare the effects of market volatilities on NETGEAR and EMBARQ 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 EMBARQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and EMBARQ.

Diversification Opportunities for NETGEAR and EMBARQ

0.51

Correlation Coefficient

NETGEAR  EMBARQ

Very weak diversification

The 3 months correlation between NETGEAR and EMBARQ is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and EMBARQ P 7995 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARQ P 7995 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 EMBARQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARQ P 7995 has no effect on the direction of NETGEAR i.e., NETGEAR and EMBARQ go up and down completely randomly.

Pair Corralation between NETGEAR and EMBARQ

Given the investment horizon of 90 days NETGEAR is expected to generate 0.8 times more return on investment than EMBARQ. However, NETGEAR is 1.24 times less risky than EMBARQ. It trades about 0.28 of its potential returns per unit of risk. EMBARQ P 7995 is currently generating about 0.2 per unit of risk. If you would invest  2,417  in NETGEAR on October 8, 2024 and sell it today you would earn a total of  328.00  from holding NETGEAR or generate 13.57% return on investment over 90 days.

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

NETGEAR  vs.  EMBARQ P 7995

NETGEAR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 16 (%) 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.

EMBARQ P 7995

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMBARQ P 7995 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for EMBARQ P 7995 investors.

Pair Trading with NETGEAR and EMBARQ

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

The idea behind NETGEAR and EMBARQ P 7995 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.