Correlation Between NETGEAR and American Axle
Can any of the company-specific risk be diversified away by investing in both NETGEAR and American Axle 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 NETGEAR and American Axle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and American Axle Manufacturing, you can compare the effects of market volatilities on NETGEAR and American Axle 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 NETGEAR with a short position of American Axle. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and American Axle.
Diversification Opportunities for NETGEAR and American Axle
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between NETGEAR and American is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and American Axle Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Axle Manufa and NETGEAR 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 NETGEAR are associated (or correlated) with American Axle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Axle Manufa has no effect on the direction of NETGEAR i.e., NETGEAR and American Axle go up and down completely randomly.
Pair Corralation between NETGEAR and American Axle
Given the investment horizon of 90 days NETGEAR is expected to generate 0.63 times more return on investment than American Axle. However, NETGEAR is 1.6 times less risky than American Axle. It trades about 0.44 of its potential returns per unit of risk. American Axle Manufacturing is currently generating about 0.07 per unit of risk. If you would invest 2,042 in NETGEAR on August 27, 2024 and sell it today you would earn a total of 388.00 from holding NETGEAR or generate 19.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. American Axle Manufacturing
Performance |
| Timeline |
| NETGEAR |
| American Axle Manufa |
NETGEAR and American Axle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and American Axle
The main advantage of trading using opposite NETGEAR and American Axle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, American Axle 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 American Axle will offset losses from the drop in American Axle's long position.| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
| American Axle vs. Lear Corporation | American Axle vs. Commercial Vehicle Group | American Axle vs. Adient PLC | American Axle vs. Gentex |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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