Correlation Between NETGEAR and ZOOZ Power

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

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

Diversification Opportunities for NETGEAR and ZOOZ Power

0.45

Correlation Coefficient

NETGEAR  ZOOZ Power

Very weak diversification

The 3 months correlation between NETGEAR and ZOOZ is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and ZOOZ Power Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOOZ Power 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 ZOOZ Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOOZ Power has no effect on the direction of NETGEAR i.e., NETGEAR and ZOOZ Power go up and down completely randomly.

Pair Corralation between NETGEAR and ZOOZ Power

Given the investment horizon of 90 days NETGEAR is expected to generate 0.88 times more return on investment than ZOOZ Power. However, NETGEAR is 1.13 times less risky than ZOOZ Power. It trades about 0.23 of its potential returns per unit of risk. ZOOZ Power Ltd is currently generating about -0.28 per unit of risk. If you would invest  2,417  in NETGEAR on October 10, 2024 and sell it today you would earn a total of  278.00  from holding NETGEAR or generate 11.5% return on investment over 90 days.

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

NETGEAR  vs.  ZOOZ Power Ltd

NETGEAR

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 18 (%) 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.

ZOOZ Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZOOZ Power Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ZOOZ Power is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NETGEAR and ZOOZ Power

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

The idea behind NETGEAR and ZOOZ Power Ltd 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.