Correlation Between NETGEAR and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Perseus Mining 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 Perseus Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Perseus Mining Limited, you can compare the effects of market volatilities on NETGEAR and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Perseus Mining.
Diversification Opportunities for NETGEAR and Perseus Mining
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NETGEAR and Perseus is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of NETGEAR i.e., NETGEAR and Perseus Mining go up and down completely randomly.
Pair Corralation between NETGEAR and Perseus Mining
Given the investment horizon of 90 days NETGEAR is expected to generate 1.11 times more return on investment than Perseus Mining. However, NETGEAR is 1.11 times more volatile than Perseus Mining Limited. It trades about 0.08 of its potential returns per unit of risk. Perseus Mining Limited is currently generating about 0.06 per unit of risk. If you would invest 1,458 in NETGEAR on August 25, 2024 and sell it today you would earn a total of 972.00 from holding NETGEAR or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
NETGEAR vs. Perseus Mining Limited
Performance |
| Timeline |
| NETGEAR |
| Perseus Mining |
NETGEAR and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Perseus Mining
The main advantage of trading using opposite NETGEAR and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.The idea behind NETGEAR and Perseus Mining Limited 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.| Perseus Mining vs. Aurion Resources | Perseus Mining vs. Liberty Gold Corp | Perseus Mining vs. Rio2 Limited | Perseus Mining vs. Orezone Gold Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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