Correlation Between NETGEAR and SUMITOMO

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

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

Diversification Opportunities for NETGEAR and SUMITOMO

-0.55

Correlation Coefficient

NETGEAR  SUMITOMO

Excellent diversification

The 3 months correlation between NETGEAR and SUMITOMO is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and SUMITOMO MITSUI FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUMITOMO MITSUI FINANCIAL 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 SUMITOMO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUMITOMO MITSUI FINANCIAL has no effect on the direction of NETGEAR i.e., NETGEAR and SUMITOMO go up and down completely randomly.

Pair Corralation between NETGEAR and SUMITOMO

Given the investment horizon of 90 days NETGEAR is expected to under-perform the SUMITOMO. In addition to that, NETGEAR is 4.01 times more volatile than SUMITOMO MITSUI FINANCIAL. It trades about -0.06 of its total potential returns per unit of risk. SUMITOMO MITSUI FINANCIAL is currently generating about -0.06 per unit of volatility. If you would invest  8,483  in SUMITOMO MITSUI FINANCIAL on December 30, 2024 and sell it today you would lose (209.00) from holding SUMITOMO MITSUI FINANCIAL or give up 2.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

NETGEAR  vs.  SUMITOMO MITSUI FINANCIAL

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.

SUMITOMO MITSUI FINANCIAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUMITOMO MITSUI FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SUMITOMO is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NETGEAR and SUMITOMO

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

The idea behind NETGEAR and SUMITOMO MITSUI FINANCIAL 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 CEOs Directory module to screen CEOs from public companies around the world.