Correlation Between NETGEAR and Infinera
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Infinera 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 Infinera into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Infinera, you can compare the effects of market volatilities on NETGEAR and Infinera 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 Infinera. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Infinera.
Diversification Opportunities for NETGEAR and Infinera
Poor diversification
The 3 months correlation between NETGEAR and Infinera is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Infinera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinera 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 Infinera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinera has no effect on the direction of NETGEAR i.e., NETGEAR and Infinera go up and down completely randomly.
Pair Corralation between NETGEAR and Infinera
Given the investment horizon of 90 days NETGEAR is expected to generate 5.86 times more return on investment than Infinera. However, NETGEAR is 5.86 times more volatile than Infinera. It trades about 0.44 of its potential returns per unit of risk. Infinera is currently generating about -0.26 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 389.00 from holding NETGEAR or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Infinera
Performance |
| Timeline |
| NETGEAR |
| Infinera |
NETGEAR and Infinera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Infinera
The main advantage of trading using opposite NETGEAR and Infinera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Infinera 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 Infinera will offset losses from the drop in Infinera's long position.| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
| Infinera vs. Ichor Holdings | Infinera vs. Fabrinet | Infinera vs. Hello Group | Infinera vs. Ultra Clean Holdings |
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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