Correlation Between Soluna Holdings and NETGEAR

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

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

Diversification Opportunities for Soluna Holdings and NETGEAR

-0.65

Correlation Coefficient

Soluna Holdings  NETGEAR

Excellent diversification

The 3 months correlation between Soluna and NETGEAR is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Soluna Holdings and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Soluna Holdings 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 Soluna Holdings 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 Soluna Holdings i.e., Soluna Holdings and NETGEAR go up and down completely randomly.

Pair Corralation between Soluna Holdings and NETGEAR

Given the investment horizon of 90 days Soluna Holdings is expected to under-perform the NETGEAR. In addition to that, Soluna Holdings is 2.6 times more volatile than NETGEAR. It trades about -0.15 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.28 per unit of volatility. If you would invest  2,417  in NETGEAR on October 9, 2024 and sell it today you would earn a total of  328.00  from holding NETGEAR or generate 13.57% return on investment over 90 days.

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

Soluna Holdings  vs.  NETGEAR

Soluna Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

NETGEAR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 16 (%) 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 Soluna Holdings and NETGEAR

The main advantage of trading using opposite Soluna Holdings and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soluna Holdings 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 Soluna Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.