Correlation Between 63633DAF1 and NETGEAR

Can any of the company-specific risk be diversified away by investing in both 63633DAF1 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 63633DAF1 and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NHI 3 01 FEB 31 and NETGEAR, you can compare the effects of market volatilities on 63633DAF1 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 63633DAF1 with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of 63633DAF1 and NETGEAR.

Diversification Opportunities for 63633DAF1 and NETGEAR

-0.36

Correlation Coefficient

63633DAF1  NETGEAR

Very good diversification

The 3 months correlation between 63633DAF1 and NETGEAR is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NHI 3 01 FEB 31 and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and 63633DAF1 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 NHI 3 01 FEB 31 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 63633DAF1 i.e., 63633DAF1 and NETGEAR go up and down completely randomly.

Pair Corralation between 63633DAF1 and NETGEAR

Assuming the 90 days trading horizon NHI 3 01 FEB 31 is expected to under-perform the NETGEAR. But the bond apears to be less risky and, when comparing its historical volatility, NHI 3 01 FEB 31 is 4.84 times less risky than NETGEAR. The bond trades about -0.11 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,672  in NETGEAR on September 4, 2024 and sell it today you would earn a total of  785.00  from holding NETGEAR or generate 46.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

NHI 3 01 FEB 31  vs.  NETGEAR

63633DAF1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NHI 3 01 FEB 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 63633DAF1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 63633DAF1 and NETGEAR

The main advantage of trading using opposite 63633DAF1 and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 63633DAF1 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 NHI 3 01 FEB 31 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.