Correlation Between RadNet and NETGEAR

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

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

Diversification Opportunities for RadNet and NETGEAR

0.09

Correlation Coefficient

RadNet  NETGEAR

Significant diversification

The 3 months correlation between RadNet and NETGEAR is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and RadNet 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 RadNet Inc 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 RadNet i.e., RadNet and NETGEAR go up and down completely randomly.

Pair Corralation between RadNet and NETGEAR

Given the investment horizon of 90 days RadNet Inc is expected to under-perform the NETGEAR. In addition to that, RadNet is 1.55 times more volatile than NETGEAR. It trades about -0.27 of its total potential returns per unit of risk. NETGEAR is currently generating about -0.09 per unit of volatility. If you would invest  2,903  in NETGEAR on October 26, 2024 and sell it today you would lose (82.00) from holding NETGEAR or give up 2.82% of portfolio value over 90 days.

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

RadNet Inc  vs.  NETGEAR

RadNet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RadNet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RadNet is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

NETGEAR

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RadNet and NETGEAR

The main advantage of trading using opposite RadNet and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet 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 RadNet Inc 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.