Correlation Between NETGEAR and Silicom
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Silicom 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 Silicom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Silicom, you can compare the effects of market volatilities on NETGEAR and Silicom 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 Silicom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Silicom.
Diversification Opportunities for NETGEAR and Silicom
Poor diversification
The 3 months correlation between NETGEAR and Silicom is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Silicom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicom 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 Silicom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicom has no effect on the direction of NETGEAR i.e., NETGEAR and Silicom go up and down completely randomly.
Pair Corralation between NETGEAR and Silicom
Given the investment horizon of 90 days NETGEAR is expected to generate 1.69 times more return on investment than Silicom. However, NETGEAR is 1.69 times more volatile than Silicom. It trades about 0.16 of its potential returns per unit of risk. Silicom is currently generating about 0.03 per unit of risk. If you would invest 1,623 in NETGEAR on August 30, 2024 and sell it today you would earn a total of 781.00 from holding NETGEAR or generate 48.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Silicom
Performance |
| Timeline |
| NETGEAR |
| Silicom |
NETGEAR and Silicom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Silicom
The main advantage of trading using opposite NETGEAR and Silicom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Silicom 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 Silicom will offset losses from the drop in Silicom's long position.| NETGEAR vs. KVH Industries | NETGEAR vs. Ituran Location and | NETGEAR vs. Aviat Networks | NETGEAR vs. Mynaric AG ADR |
| Silicom vs. Ituran Location and | Silicom vs. Sapiens International | Silicom vs. Allot Communications | Silicom vs. Radcom |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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