Correlation Between 12527GAE3 and NETGEAR

Can any of the company-specific risk be diversified away by investing in both 12527GAE3 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 12527GAE3 and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CF INDS INC and NETGEAR, you can compare the effects of market volatilities on 12527GAE3 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 12527GAE3 with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of 12527GAE3 and NETGEAR.

Diversification Opportunities for 12527GAE3 and NETGEAR

-0.59

Correlation Coefficient

12527GAE3  NETGEAR

Excellent diversification

The 3 months correlation between 12527GAE3 and NETGEAR is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CF INDS INC and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and 12527GAE3 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 CF INDS 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 12527GAE3 i.e., 12527GAE3 and NETGEAR go up and down completely randomly.

Pair Corralation between 12527GAE3 and NETGEAR

Assuming the 90 days trading horizon CF INDS INC is expected to under-perform the NETGEAR. But the bond apears to be less risky and, when comparing its historical volatility, CF INDS INC is 2.25 times less risky than NETGEAR. The bond trades about -0.09 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,632  in NETGEAR on September 2, 2024 and sell it today you would earn a total of  828.00  from holding NETGEAR or generate 50.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

CF INDS INC  vs.  NETGEAR

CF INDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CF INDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CF INDS INC investors.

NETGEAR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 12 (%) 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 12527GAE3 and NETGEAR

The main advantage of trading using opposite 12527GAE3 and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 12527GAE3 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 CF INDS 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.