Correlation Between Celestica and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Celestica 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 Celestica and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and NETGEAR, you can compare the effects of market volatilities on Celestica 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 Celestica with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and NETGEAR.
Diversification Opportunities for Celestica and NETGEAR
Very poor diversification
The 3 months correlation between Celestica and NETGEAR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Celestica 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 Celestica 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 Celestica i.e., Celestica and NETGEAR go up and down completely randomly.
Pair Corralation between Celestica and NETGEAR
Considering the 90-day investment horizon Celestica is expected to generate 2.43 times more return on investment than NETGEAR. However, Celestica is 2.43 times more volatile than NETGEAR. It trades about 0.16 of its potential returns per unit of risk. NETGEAR is currently generating about 0.09 per unit of risk. If you would invest 8,942 in Celestica on November 3, 2024 and sell it today you would earn a total of 3,405 from holding Celestica or generate 38.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celestica vs. NETGEAR
Performance |
| Timeline |
| Celestica |
| NETGEAR |
Celestica and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celestica and NETGEAR
The main advantage of trading using opposite Celestica and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica 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.| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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