Correlation Between Mars Acquisition and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Mars Acquisition 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 Mars Acquisition and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mars Acquisition Corp and NETGEAR, you can compare the effects of market volatilities on Mars Acquisition 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 Mars Acquisition with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mars Acquisition and NETGEAR.
Diversification Opportunities for Mars Acquisition and NETGEAR
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mars and NETGEAR is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mars Acquisition Corp and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Mars Acquisition 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 Mars Acquisition 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 Mars Acquisition i.e., Mars Acquisition and NETGEAR go up and down completely randomly.
Pair Corralation between Mars Acquisition and NETGEAR
Assuming the 90 days horizon Mars Acquisition Corp is expected to under-perform the NETGEAR. But the stock apears to be less risky and, when comparing its historical volatility, Mars Acquisition Corp is 1.19 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 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,084 in NETGEAR on September 12, 2024 and sell it today you would earn a total of 424.00 from holding NETGEAR or generate 20.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mars Acquisition Corp vs. NETGEAR
Performance |
| Timeline |
| Mars Acquisition Corp |
| NETGEAR |
Mars Acquisition and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mars Acquisition and NETGEAR
The main advantage of trading using opposite Mars Acquisition and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mars Acquisition 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.| Mars Acquisition vs. HUMANA INC | Mars Acquisition vs. Barloworld Ltd ADR | Mars Acquisition vs. Morningstar Unconstrained Allocation | Mars Acquisition vs. Thrivent High Yield |
| NETGEAR vs. Hewlett Packard Enterprise | NETGEAR vs. Juniper Networks | NETGEAR vs. Ciena Corp | NETGEAR vs. Cisco Systems |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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