Correlation Between NETGEAR and BorgWarner
Can any of the company-specific risk be diversified away by investing in both NETGEAR and BorgWarner 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 BorgWarner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and BorgWarner, you can compare the effects of market volatilities on NETGEAR and BorgWarner 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 BorgWarner. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and BorgWarner.
Diversification Opportunities for NETGEAR and BorgWarner
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NETGEAR and BorgWarner is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and BorgWarner in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BorgWarner 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 BorgWarner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BorgWarner has no effect on the direction of NETGEAR i.e., NETGEAR and BorgWarner go up and down completely randomly.
Pair Corralation between NETGEAR and BorgWarner
Given the investment horizon of 90 days NETGEAR is expected to generate 1.58 times more return on investment than BorgWarner. However, NETGEAR is 1.58 times more volatile than BorgWarner. It trades about 0.27 of its potential returns per unit of risk. BorgWarner is currently generating about -0.02 per unit of risk. If you would invest 1,906 in NETGEAR on September 3, 2024 and sell it today you would earn a total of 554.00 from holding NETGEAR or generate 29.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. BorgWarner
Performance |
| Timeline |
| NETGEAR |
| BorgWarner |
NETGEAR and BorgWarner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and BorgWarner
The main advantage of trading using opposite NETGEAR and BorgWarner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, BorgWarner 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 BorgWarner will offset losses from the drop in BorgWarner's long position.| NETGEAR vs. Hewlett Packard Enterprise | NETGEAR vs. Juniper Networks | NETGEAR vs. Motorola Solutions | NETGEAR vs. Cisco Systems |
| BorgWarner vs. Allison Transmission Holdings | BorgWarner vs. Aptiv PLC | BorgWarner vs. LKQ Corporation | BorgWarner vs. Lear Corporation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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