Correlation Between NETGEAR and Celestica
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Celestica 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 Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Celestica, you can compare the effects of market volatilities on NETGEAR and Celestica 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 Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Celestica.
Diversification Opportunities for NETGEAR and Celestica
Very poor diversification
The 3 months correlation between NETGEAR and Celestica is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of NETGEAR i.e., NETGEAR and Celestica go up and down completely randomly.
Pair Corralation between NETGEAR and Celestica
Given the investment horizon of 90 days NETGEAR is expected to generate 14.66 times less return on investment than Celestica. But when comparing it to its historical volatility, NETGEAR is 3.23 times less risky than Celestica. It trades about 0.05 of its potential returns per unit of risk. Celestica is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 9,307 in Celestica on November 3, 2024 and sell it today you would earn a total of 3,040 from holding Celestica or generate 32.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Celestica
Performance |
| Timeline |
| NETGEAR |
| Celestica |
NETGEAR and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Celestica
The main advantage of trading using opposite NETGEAR and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
| Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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