Correlation Between ICC Holdings and NETGEAR
Can any of the company-specific risk be diversified away by investing in both ICC Holdings 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 ICC Holdings and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICC Holdings and NETGEAR, you can compare the effects of market volatilities on ICC Holdings 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 ICC Holdings with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICC Holdings and NETGEAR.
Diversification Opportunities for ICC Holdings and NETGEAR
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ICC and NETGEAR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ICC Holdings and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and ICC Holdings 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 ICC Holdings 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 ICC Holdings i.e., ICC Holdings and NETGEAR go up and down completely randomly.
Pair Corralation between ICC Holdings and NETGEAR
Given the investment horizon of 90 days ICC Holdings is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, ICC Holdings is 4.31 times less risky than NETGEAR. The stock trades about -0.02 of its potential returns per unit of risk. The NETGEAR is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,044 in NETGEAR on August 30, 2024 and sell it today you would earn a total of 360.00 from holding NETGEAR or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.26% |
| Values | Daily Returns |
ICC Holdings vs. NETGEAR
Performance |
| Timeline |
| ICC Holdings |
| NETGEAR |
ICC Holdings and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICC Holdings and NETGEAR
The main advantage of trading using opposite ICC Holdings and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICC Holdings 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.| ICC Holdings vs. AMERISAFE | ICC Holdings vs. NMI Holdings | ICC Holdings vs. Investors Title | ICC Holdings vs. Essent Group |
| NETGEAR vs. Cambium Networks Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Knowles Cor | NETGEAR vs. AudioCodes |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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