Correlation Between Assurant and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Assurant 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 Assurant and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assurant and NETGEAR, you can compare the effects of market volatilities on Assurant 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 Assurant with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assurant and NETGEAR.
Diversification Opportunities for Assurant and NETGEAR
Very poor diversification
The 3 months correlation between Assurant and NETGEAR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Assurant and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Assurant 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 Assurant 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 Assurant i.e., Assurant and NETGEAR go up and down completely randomly.
Pair Corralation between Assurant and NETGEAR
Considering the 90-day investment horizon Assurant is expected to generate 0.49 times more return on investment than NETGEAR. However, Assurant is 2.04 times less risky than NETGEAR. It trades about 0.15 of its potential returns per unit of risk. NETGEAR is currently generating about 0.06 per unit of risk. If you would invest 20,998 in Assurant on September 12, 2024 and sell it today you would earn a total of 695.00 from holding Assurant or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Assurant vs. NETGEAR
Performance |
| Timeline |
| Assurant |
| NETGEAR |
Assurant and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assurant and NETGEAR
The main advantage of trading using opposite Assurant and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assurant 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.| Assurant vs. Assured Guaranty | Assurant vs. Ambac Financial Group | Assurant vs. AMERISAFE | Assurant vs. Enact Holdings |
| NETGEAR vs. Hewlett Packard Enterprise | NETGEAR vs. Juniper Networks | NETGEAR vs. Ciena Corp | NETGEAR vs. Cisco Systems |
Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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