Correlation Between 50247WAB3 and NETGEAR

Can any of the company-specific risk be diversified away by investing in both 50247WAB3 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 50247WAB3 and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LYB INTL FIN and NETGEAR, you can compare the effects of market volatilities on 50247WAB3 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 50247WAB3 with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of 50247WAB3 and NETGEAR.

Diversification Opportunities for 50247WAB3 and NETGEAR

0.04

Correlation Coefficient

50247WAB3  NETGEAR

Significant diversification

The 3 months correlation between 50247WAB3 and NETGEAR is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding LYB INTL FIN and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and 50247WAB3 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 LYB INTL FIN 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 50247WAB3 i.e., 50247WAB3 and NETGEAR go up and down completely randomly.

Pair Corralation between 50247WAB3 and NETGEAR

Assuming the 90 days trading horizon LYB INTL FIN is expected to under-perform the NETGEAR. But the bond apears to be less risky and, when comparing its historical volatility, LYB INTL FIN is 13.82 times less risky than NETGEAR. The bond trades about -0.01 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  2,016  in NETGEAR on October 24, 2024 and sell it today you would earn a total of  805.00  from holding NETGEAR or generate 39.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	78.33%
Values	Daily Returns

LYB INTL FIN  vs.  NETGEAR

LYB INTL FIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB INTL FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50247WAB3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NETGEAR

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 21 (%) 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 50247WAB3 and NETGEAR

The main advantage of trading using opposite 50247WAB3 and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 50247WAB3 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 LYB INTL FIN 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.