Correlation Between NETGEAR and Xtant Medical

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

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

Diversification Opportunities for NETGEAR and Xtant Medical

-0.4

Correlation Coefficient

NETGEAR  Xtant Medical

Very good diversification

The 3 months correlation between NETGEAR and Xtant is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Xtant Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtant Medical Holdings 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 Xtant Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtant Medical Holdings has no effect on the direction of NETGEAR i.e., NETGEAR and Xtant Medical go up and down completely randomly.

Pair Corralation between NETGEAR and Xtant Medical

Given the investment horizon of 90 days NETGEAR is expected to generate 0.49 times more return on investment than Xtant Medical. However, NETGEAR is 2.03 times less risky than Xtant Medical. It trades about 0.27 of its potential returns per unit of risk. Xtant Medical Holdings is currently generating about 0.04 per unit of risk. If you would invest  2,022  in NETGEAR on October 25, 2024 and sell it today you would earn a total of  799.00  from holding NETGEAR or generate 39.52% return on investment over 90 days.

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

NETGEAR  vs.  Xtant Medical Holdings

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.

Xtant Medical Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtant Medical Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Xtant Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NETGEAR and Xtant Medical

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

The idea behind NETGEAR and Xtant Medical Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.