Correlation Between NETGEAR and Stratasys
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Stratasys 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 Stratasys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Stratasys, you can compare the effects of market volatilities on NETGEAR and Stratasys 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 Stratasys. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Stratasys.
Diversification Opportunities for NETGEAR and Stratasys
Poor diversification
The 3 months correlation between NETGEAR and Stratasys is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Stratasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratasys 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 Stratasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratasys has no effect on the direction of NETGEAR i.e., NETGEAR and Stratasys go up and down completely randomly.
Pair Corralation between NETGEAR and Stratasys
Given the investment horizon of 90 days NETGEAR is expected to generate 0.94 times more return on investment than Stratasys. However, NETGEAR is 1.06 times less risky than Stratasys. It trades about 0.14 of its potential returns per unit of risk. Stratasys is currently generating about 0.04 per unit of risk. If you would invest 1,371 in NETGEAR on September 1, 2024 and sell it today you would earn a total of 1,089 from holding NETGEAR or generate 79.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Stratasys
Performance |
| Timeline |
| NETGEAR |
| Stratasys |
NETGEAR and Stratasys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Stratasys
The main advantage of trading using opposite NETGEAR and Stratasys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Stratasys 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 Stratasys will offset losses from the drop in Stratasys' long position.| NETGEAR vs. Comtech Telecommunications Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Silicom | NETGEAR vs. Knowles Cor |
| Stratasys vs. Nano Dimension | Stratasys vs. IONQ Inc | Stratasys vs. D Wave Quantum | Stratasys vs. Desktop Metal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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