Correlation Between Church Dwight and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Church Dwight 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 Church Dwight and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Church Dwight and NETGEAR, you can compare the effects of market volatilities on Church Dwight 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 Church Dwight with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and NETGEAR.
Diversification Opportunities for Church Dwight and NETGEAR
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Church and NETGEAR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Church Dwight 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 Church Dwight 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 Church Dwight i.e., Church Dwight and NETGEAR go up and down completely randomly.
Pair Corralation between Church Dwight and NETGEAR
Considering the 90-day investment horizon Church Dwight is expected to generate 1.17 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Church Dwight is 1.43 times less risky than NETGEAR. It trades about 0.35 of its potential returns per unit of risk. NETGEAR is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,192 in NETGEAR on September 1, 2024 and sell it today you would earn a total of 268.00 from holding NETGEAR or generate 12.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Church Dwight vs. NETGEAR
Performance |
| Timeline |
| Church Dwight |
| NETGEAR |
Church Dwight and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Church Dwight and NETGEAR
The main advantage of trading using opposite Church Dwight and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Church Dwight 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.| Church Dwight vs. Colgate Palmolive | Church Dwight vs. Unilever PLC ADR | Church Dwight vs. Kimberly Clark | Church Dwight vs. Estee Lauder Companies |
| NETGEAR vs. Comtech Telecommunications Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Silicom | NETGEAR vs. Knowles Cor |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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