Correlation Between Brunswick and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and NETGEAR, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and NETGEAR.
Diversification Opportunities for Brunswick and NETGEAR
Good diversification
The 3 months correlation between Brunswick and NETGEAR is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and NETGEAR go up and down completely randomly.
Pair Corralation between Brunswick and NETGEAR
Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the NETGEAR. In addition to that, Brunswick is 1.01 times more volatile than NETGEAR. It trades about -0.09 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.25 per unit of volatility. If you would invest 2,069 in NETGEAR on September 13, 2024 and sell it today you would earn a total of 484.50 from holding NETGEAR or generate 23.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. NETGEAR
Performance |
| Timeline |
| Brunswick |
| NETGEAR |
Brunswick and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and NETGEAR
The main advantage of trading using opposite Brunswick and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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.| Brunswick vs. Clarus Corp | Brunswick vs. Escalade Incorporated | Brunswick vs. Johnson Outdoors | Brunswick vs. JAKKS Pacific |
| NETGEAR vs. Passage Bio | NETGEAR vs. Black Diamond Therapeutics | NETGEAR vs. Alector | NETGEAR vs. Century Therapeutics |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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