Correlation Between Catalyst Pharmaceuticals and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Catalyst Pharmaceuticals and NETGEAR, you can compare the effects of market volatilities on Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst Pharmaceuticals and NETGEAR.
Diversification Opportunities for Catalyst Pharmaceuticals and NETGEAR
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Catalyst and NETGEAR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and NETGEAR go up and down completely randomly.
Pair Corralation between Catalyst Pharmaceuticals and NETGEAR
Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to generate 1.05 times more return on investment than NETGEAR. However, Catalyst Pharmaceuticals is 1.05 times more volatile than NETGEAR. It trades about 0.03 of its potential returns per unit of risk. NETGEAR is currently generating about 0.03 per unit of risk. If you would invest 1,741 in Catalyst Pharmaceuticals on September 2, 2024 and sell it today you would earn a total of 466.00 from holding Catalyst Pharmaceuticals or generate 26.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Catalyst Pharmaceuticals vs. NETGEAR
Performance |
| Timeline |
| Catalyst Pharmaceuticals |
| NETGEAR |
Catalyst Pharmaceuticals and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Catalyst Pharmaceuticals and NETGEAR
The main advantage of trading using opposite Catalyst Pharmaceuticals and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalyst Pharmaceuticals 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.| Catalyst Pharmaceuticals vs. Day One Biopharmaceuticals | Catalyst Pharmaceuticals vs. Terns Pharmaceuticals | Catalyst Pharmaceuticals vs. X4 Pharmaceuticals | Catalyst Pharmaceuticals vs. Inozyme Pharma |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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