Correlation Between NETGEAR and KLA Tencor
Can any of the company-specific risk be diversified away by investing in both NETGEAR and KLA Tencor 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 KLA Tencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and KLA Tencor, you can compare the effects of market volatilities on NETGEAR and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and KLA Tencor.
Diversification Opportunities for NETGEAR and KLA Tencor
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NETGEAR and KLA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of NETGEAR i.e., NETGEAR and KLA Tencor go up and down completely randomly.
Pair Corralation between NETGEAR and KLA Tencor
Given the investment horizon of 90 days NETGEAR is expected to generate 1.22 times more return on investment than KLA Tencor. However, NETGEAR is 1.22 times more volatile than KLA Tencor. It trades about 0.1 of its potential returns per unit of risk. KLA Tencor is currently generating about 0.06 per unit of risk. If you would invest 1,387 in NETGEAR on November 9, 2024 and sell it today you would earn a total of 1,466 from holding NETGEAR or generate 105.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. KLA Tencor
Performance |
| Timeline |
| NETGEAR |
| KLA Tencor |
NETGEAR and KLA Tencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and KLA Tencor
The main advantage of trading using opposite NETGEAR and KLA Tencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, KLA Tencor 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 KLA Tencor will offset losses from the drop in KLA Tencor's long position.| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
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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