Correlation Between NETGEAR and Hooker Furniture
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Hooker Furniture 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 Hooker Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Hooker Furniture, you can compare the effects of market volatilities on NETGEAR and Hooker Furniture 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 Hooker Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Hooker Furniture.
Diversification Opportunities for NETGEAR and Hooker Furniture
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NETGEAR and Hooker is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Hooker Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hooker Furniture 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 Hooker Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hooker Furniture has no effect on the direction of NETGEAR i.e., NETGEAR and Hooker Furniture go up and down completely randomly.
Pair Corralation between NETGEAR and Hooker Furniture
Given the investment horizon of 90 days NETGEAR is expected to generate 2.08 times less return on investment than Hooker Furniture. But when comparing it to its historical volatility, NETGEAR is 1.77 times less risky than Hooker Furniture. It trades about 0.17 of its potential returns per unit of risk. Hooker Furniture is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,659 in Hooker Furniture on September 3, 2024 and sell it today you would earn a total of 214.00 from holding Hooker Furniture or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Hooker Furniture
Performance |
| Timeline |
| NETGEAR |
| Hooker Furniture |
NETGEAR and Hooker Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Hooker Furniture
The main advantage of trading using opposite NETGEAR and Hooker Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Hooker Furniture 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 Hooker Furniture will offset losses from the drop in Hooker Furniture's long position.| NETGEAR vs. Hewlett Packard Enterprise | NETGEAR vs. Juniper Networks | NETGEAR vs. Motorola Solutions | NETGEAR vs. Cisco Systems |
| Hooker Furniture vs. Bassett Furniture Industries | Hooker Furniture vs. Natuzzi SpA | Hooker Furniture vs. Flexsteel Industries | Hooker Furniture vs. Hamilton Beach Brands |
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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