Correlation Between Portmeirion Group and NETGEAR

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

By analyzing existing cross correlation between Portmeirion Group PLC and NETGEAR, you can compare the effects of market volatilities on Portmeirion Group and NETGEAR 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 Portmeirion Group with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portmeirion Group and NETGEAR.

Diversification Opportunities for Portmeirion Group and NETGEAR

0.8

Correlation Coefficient

Portmeirion Group  NETGEAR

Very poor diversification

The 3 months correlation between Portmeirion and NETGEAR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Portmeirion Group PLC and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Portmeirion Group 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 Portmeirion Group PLC are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Portmeirion Group i.e., Portmeirion Group and NETGEAR go up and down completely randomly.

Pair Corralation between Portmeirion Group and NETGEAR

Assuming the 90 days horizon Portmeirion Group is expected to generate 19.88 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Portmeirion Group PLC is 22.53 times less risky than NETGEAR. It trades about 0.17 of its potential returns per unit of risk. NETGEAR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,091  in NETGEAR on September 17, 2024 and sell it today you would earn a total of  468.00  from holding NETGEAR or generate 22.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Portmeirion Group PLC  vs.  NETGEAR

Portmeirion Group PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Portmeirion Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Portmeirion Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NETGEAR

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Portmeirion Group and NETGEAR

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

The idea behind Portmeirion Group PLC and NETGEAR 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.