Correlation Between Globalfoundries and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Globalfoundries 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 Globalfoundries and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globalfoundries and NETGEAR, you can compare the effects of market volatilities on Globalfoundries 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 Globalfoundries with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalfoundries and NETGEAR.
Diversification Opportunities for Globalfoundries and NETGEAR
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globalfoundries and NETGEAR is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Globalfoundries and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Globalfoundries 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 Globalfoundries 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 Globalfoundries i.e., Globalfoundries and NETGEAR go up and down completely randomly.
Pair Corralation between Globalfoundries and NETGEAR
Considering the 90-day investment horizon Globalfoundries is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, Globalfoundries is 1.3 times less risky than NETGEAR. The stock trades about -0.05 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,715 in NETGEAR on November 2, 2024 and sell it today you would earn a total of 61.00 from holding NETGEAR or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globalfoundries vs. NETGEAR
Performance |
| Timeline |
| Globalfoundries |
| NETGEAR |
Globalfoundries and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globalfoundries and NETGEAR
The main advantage of trading using opposite Globalfoundries and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globalfoundries 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.| Globalfoundries vs. NXP Semiconductors NV | Globalfoundries vs. Analog Devices | Globalfoundries vs. ON Semiconductor | Globalfoundries vs. Lattice Semiconductor |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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