Correlation Between FARO Technologies and NETGEAR
Can any of the company-specific risk be diversified away by investing in both FARO Technologies 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 FARO Technologies and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and NETGEAR, you can compare the effects of market volatilities on FARO Technologies 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 FARO Technologies with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and NETGEAR.
Diversification Opportunities for FARO Technologies and NETGEAR
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FARO and NETGEAR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and FARO Technologies 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 FARO Technologies 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 FARO Technologies i.e., FARO Technologies and NETGEAR go up and down completely randomly.
Pair Corralation between FARO Technologies and NETGEAR
Given the investment horizon of 90 days FARO Technologies is expected to generate 1.57 times less return on investment than NETGEAR. In addition to that, FARO Technologies is 1.33 times more volatile than NETGEAR. It trades about 0.01 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.02 per unit of volatility. If you would invest 2,066 in NETGEAR on August 30, 2024 and sell it today you would earn a total of 338.00 from holding NETGEAR or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. NETGEAR
Performance |
| Timeline |
| FARO Technologies |
| NETGEAR |
FARO Technologies and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and NETGEAR
The main advantage of trading using opposite FARO Technologies and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies 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.| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
| NETGEAR vs. KVH Industries | NETGEAR vs. Merck Company | NETGEAR vs. Pharvaris BV | NETGEAR vs. Brinker International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |