Correlation Between PVH Corp and NETGEAR

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

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

Diversification Opportunities for PVH Corp and NETGEAR

0.56

Correlation Coefficient

PVH Corp  NETGEAR

Very weak diversification

The 3 months correlation between PVH and NETGEAR is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PVH Corp and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and PVH Corp 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 PVH Corp 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 PVH Corp i.e., PVH Corp and NETGEAR go up and down completely randomly.

Pair Corralation between PVH Corp and NETGEAR

Considering the 90-day investment horizon PVH Corp is expected to under-perform the NETGEAR. In addition to that, PVH Corp is 1.07 times more volatile than NETGEAR. It trades about -0.38 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.01 per unit of volatility. If you would invest  2,719  in NETGEAR on October 23, 2024 and sell it today you would lose (2.00) from holding NETGEAR or give up 0.07% of portfolio value over 90 days.

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

PVH Corp  vs.  NETGEAR

PVH Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PVH Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PVH Corp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with PVH Corp and NETGEAR

The main advantage of trading using opposite PVH Corp and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PVH Corp 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 PVH Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.