Correlation Between HNI Corp and NETGEAR
Can any of the company-specific risk be diversified away by investing in both HNI Corp 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 HNI Corp and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNI Corp and NETGEAR, you can compare the effects of market volatilities on HNI Corp 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 HNI Corp with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNI Corp and NETGEAR.
Diversification Opportunities for HNI Corp and NETGEAR
Poor diversification
The 3 months correlation between HNI and NETGEAR is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding HNI Corp and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and HNI Corp 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 HNI Corp 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 HNI Corp i.e., HNI Corp and NETGEAR go up and down completely randomly.
Pair Corralation between HNI Corp and NETGEAR
Considering the 90-day investment horizon HNI Corp is expected to generate 0.95 times more return on investment than NETGEAR. However, HNI Corp is 1.05 times less risky than NETGEAR. It trades about 0.38 of its potential returns per unit of risk. NETGEAR is currently generating about 0.21 per unit of risk. If you would invest 4,942 in HNI Corp on September 2, 2024 and sell it today you would earn a total of 723.00 from holding HNI Corp or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HNI Corp vs. NETGEAR
Performance |
| Timeline |
| HNI Corp |
| NETGEAR |
HNI Corp and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HNI Corp and NETGEAR
The main advantage of trading using opposite HNI Corp and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNI Corp 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.The idea behind HNI Corp and NETGEAR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |