Correlation Between KLA Tencor and NETGEAR
Can any of the company-specific risk be diversified away by investing in both KLA Tencor 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 KLA Tencor and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and NETGEAR, you can compare the effects of market volatilities on KLA Tencor 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 KLA Tencor with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and NETGEAR.
Diversification Opportunities for KLA Tencor and NETGEAR
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KLA and NETGEAR is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and KLA Tencor 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 KLA Tencor 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 KLA Tencor i.e., KLA Tencor and NETGEAR go up and down completely randomly.
Pair Corralation between KLA Tencor and NETGEAR
Given the investment horizon of 90 days KLA Tencor is expected to generate 0.95 times more return on investment than NETGEAR. However, KLA Tencor is 1.05 times less risky than NETGEAR. It trades about 0.34 of its potential returns per unit of risk. NETGEAR is currently generating about 0.0 per unit of risk. If you would invest 63,012 in KLA Tencor on November 1, 2024 and sell it today you would earn a total of 11,231 from holding KLA Tencor or generate 17.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLA Tencor vs. NETGEAR
Performance |
| Timeline |
| KLA Tencor |
| NETGEAR |
KLA Tencor and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and NETGEAR
The main advantage of trading using opposite KLA Tencor and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor 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.| KLA Tencor vs. Diodes Incorporated | KLA Tencor vs. Daqo New Energy | KLA Tencor vs. Micron Technology | KLA Tencor vs. MagnaChip 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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