Correlation Between Freeport and NETGEAR

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

By analyzing existing cross correlation between Freeport McMoRan 455 percent and NETGEAR, you can compare the effects of market volatilities on Freeport 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 Freeport with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport and NETGEAR.

Diversification Opportunities for Freeport and NETGEAR

-0.32

Correlation Coefficient

Freeport  NETGEAR

Very good diversification

The 3 months correlation between Freeport and NETGEAR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 455 percent and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Freeport 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 Freeport McMoRan 455 percent 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 Freeport i.e., Freeport and NETGEAR go up and down completely randomly.

Pair Corralation between Freeport and NETGEAR

Assuming the 90 days trading horizon Freeport McMoRan 455 percent is expected to under-perform the NETGEAR. But the bond apears to be less risky and, when comparing its historical volatility, Freeport McMoRan 455 percent is 9.52 times less risky than NETGEAR. The bond trades about -0.71 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,446  in NETGEAR on September 19, 2024 and sell it today you would earn a total of  245.00  from holding NETGEAR or generate 10.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	9.09%
Values	Daily Returns

Freeport McMoRan 455 percent  vs.  NETGEAR

Freeport McMoRan 455

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan 455 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freeport is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

NETGEAR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freeport and NETGEAR

The main advantage of trading using opposite Freeport and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport 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 Freeport McMoRan 455 percent 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 Transaction History module to view history of all your transactions and understand their impact on performance.