Correlation Between ENTERGY and NETGEAR

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

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

Diversification Opportunities for ENTERGY and NETGEAR

-0.56

Correlation Coefficient

ENTERGY  NETGEAR

Excellent diversification

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

Pair Corralation between ENTERGY and NETGEAR

Assuming the 90 days trading horizon ENTERGY TEX INC is expected to generate 0.17 times more return on investment than NETGEAR. However, ENTERGY TEX INC is 5.74 times less risky than NETGEAR. It trades about 0.02 of its potential returns per unit of risk. NETGEAR is currently generating about -0.09 per unit of risk. If you would invest  9,674  in ENTERGY TEX INC on December 26, 2024 and sell it today you would earn a total of  32.00  from holding ENTERGY TEX INC or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.77%
Values	Daily Returns

ENTERGY TEX INC  vs.  NETGEAR

ENTERGY TEX INC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ENTERGY TEX INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ENTERGY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

NETGEAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ENTERGY and NETGEAR

The main advantage of trading using opposite ENTERGY and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENTERGY 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 ENTERGY TEX 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 Stocks Directory module to find actively traded stocks across global markets.