Correlation Between Nokia Corp and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Nokia 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 Nokia Corp and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nokia Corp ADR and NETGEAR, you can compare the effects of market volatilities on Nokia 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 Nokia Corp with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nokia Corp and NETGEAR.
Diversification Opportunities for Nokia Corp and NETGEAR
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nokia and NETGEAR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nokia Corp ADR and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Nokia 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 Nokia Corp ADR 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 Nokia Corp i.e., Nokia Corp and NETGEAR go up and down completely randomly.
Pair Corralation between Nokia Corp and NETGEAR
Considering the 90-day investment horizon Nokia Corp ADR is expected to under-perform the NETGEAR. In addition to that, Nokia Corp is 1.0 times more volatile than NETGEAR. It trades about -0.39 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.44 per unit of volatility. If you would invest 2,042 in NETGEAR on August 27, 2024 and sell it today you would earn a total of 389.00 from holding NETGEAR or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nokia Corp ADR vs. NETGEAR
Performance |
| Timeline |
| Nokia Corp ADR |
| NETGEAR |
Nokia Corp and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nokia Corp and NETGEAR
The main advantage of trading using opposite Nokia Corp and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nokia 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.| Nokia Corp vs. Ichor Holdings | Nokia Corp vs. Fabrinet | Nokia Corp vs. Hello Group | Nokia Corp vs. Ultra Clean Holdings |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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