Correlation Between Aldel Financial and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Aldel Financial 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 Aldel Financial and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and NETGEAR, you can compare the effects of market volatilities on Aldel Financial 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 Aldel Financial with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and NETGEAR.
Diversification Opportunities for Aldel Financial and NETGEAR
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aldel and NETGEAR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Aldel Financial 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 Aldel Financial II 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 Aldel Financial i.e., Aldel Financial and NETGEAR go up and down completely randomly.
Pair Corralation between Aldel Financial and NETGEAR
Given the investment horizon of 90 days Aldel Financial is expected to generate 4.35 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Aldel Financial II is 22.55 times less risky than NETGEAR. It trades about 0.14 of its potential returns per unit of risk. NETGEAR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,745 in NETGEAR on November 5, 2024 and sell it today you would earn a total of 20.00 from holding NETGEAR or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldel Financial II vs. NETGEAR
Performance |
| Timeline |
| Aldel Financial II |
| NETGEAR |
Aldel Financial and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and NETGEAR
The main advantage of trading using opposite Aldel Financial and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial 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.| Aldel Financial vs. HomeTrust Bancshares | Aldel Financial vs. Mid Atlantic Home Health | Aldel Financial vs. Reservoir Media | Aldel Financial vs. Taylor Morn Home |
| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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