Correlation Between Chemours and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Chemours 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 Chemours and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chemours Co and NETGEAR, you can compare the effects of market volatilities on Chemours 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 Chemours with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and NETGEAR.
Diversification Opportunities for Chemours and NETGEAR
Very weak diversification
The 3 months correlation between Chemours and NETGEAR is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Chemours 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 Chemours Co 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 Chemours i.e., Chemours and NETGEAR go up and down completely randomly.
Pair Corralation between Chemours and NETGEAR
Allowing for the 90-day total investment horizon Chemours is expected to generate 1.04 times less return on investment than NETGEAR. In addition to that, Chemours is 2.13 times more volatile than NETGEAR. It trades about 0.22 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.49 per unit of volatility. If you would invest 2,042 in NETGEAR on August 28, 2024 and sell it today you would earn a total of 465.00 from holding NETGEAR or generate 22.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chemours Co vs. NETGEAR
Performance |
| Timeline |
| Chemours |
| NETGEAR |
Chemours and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chemours and NETGEAR
The main advantage of trading using opposite Chemours and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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.| Chemours vs. Olin Corporation | Chemours vs. Cabot | Chemours vs. Kronos Worldwide | Chemours vs. LyondellBasell Industries NV |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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