Correlation Between NETGEAR and Iris Energy
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Iris Energy 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 Iris Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Iris Energy, you can compare the effects of market volatilities on NETGEAR and Iris Energy 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 Iris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Iris Energy.
Diversification Opportunities for NETGEAR and Iris Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NETGEAR and Iris is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of NETGEAR i.e., NETGEAR and Iris Energy go up and down completely randomly.
Pair Corralation between NETGEAR and Iris Energy
Given the investment horizon of 90 days NETGEAR is expected to generate 1.03 times less return on investment than Iris Energy. But when comparing it to its historical volatility, NETGEAR is 3.78 times less risky than Iris Energy. It trades about 0.3 of its potential returns per unit of risk. Iris Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,041 in Iris Energy on September 25, 2024 and sell it today you would earn a total of 84.00 from holding Iris Energy or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Iris Energy
Performance |
| Timeline |
| NETGEAR |
| Iris Energy |
NETGEAR and Iris Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Iris Energy
The main advantage of trading using opposite NETGEAR and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Iris Energy 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 Iris Energy will offset losses from the drop in Iris Energy's long position.The idea behind NETGEAR and Iris Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Iris Energy vs. The Cheesecake Factory | Iris Energy vs. Dennys Corp | Iris Energy vs. Sweetgreen | Iris Energy vs. Avadel Pharmaceuticals PLC |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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