Correlation Between Carsales and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Carsales 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 Carsales and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom Ltd ADR and NETGEAR, you can compare the effects of market volatilities on Carsales 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 Carsales with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carsales and NETGEAR.
Diversification Opportunities for Carsales and NETGEAR
Very good diversification
The 3 months correlation between Carsales and NETGEAR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom Ltd ADR and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Carsales 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 CarsalesCom Ltd ADR 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 Carsales i.e., Carsales and NETGEAR go up and down completely randomly.
Pair Corralation between Carsales and NETGEAR
Assuming the 90 days horizon Carsales is expected to generate 4.52 times less return on investment than NETGEAR. In addition to that, Carsales is 1.47 times more volatile than NETGEAR. It trades about 0.07 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.44 per unit of volatility. If you would invest 2,042 in NETGEAR on August 27, 2024 and sell it today you would earn a total of 389.00 from holding NETGEAR or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom Ltd ADR vs. NETGEAR
Performance |
| Timeline |
| CarsalesCom ADR |
| NETGEAR |
Carsales and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carsales and NETGEAR
The main advantage of trading using opposite Carsales and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carsales 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.| Carsales vs. Quizam Media | Carsales vs. DGTL Holdings | Carsales vs. Tinybeans Group Limited | Carsales vs. Sabio Holdings |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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