Correlation Between NETGEAR and Tigo Energy
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Tigo 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 Tigo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Tigo Energy, you can compare the effects of market volatilities on NETGEAR and Tigo 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Tigo Energy.
Diversification Opportunities for NETGEAR and Tigo Energy
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NETGEAR and Tigo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of NETGEAR i.e., NETGEAR and Tigo Energy go up and down completely randomly.
Pair Corralation between NETGEAR and Tigo Energy
Given the investment horizon of 90 days NETGEAR is expected to generate 0.59 times more return on investment than Tigo Energy. However, NETGEAR is 1.69 times less risky than Tigo Energy. It trades about 0.14 of its potential returns per unit of risk. Tigo Energy is currently generating about -0.05 per unit of risk. If you would invest 1,455 in NETGEAR on September 12, 2024 and sell it today you would earn a total of 1,053 from holding NETGEAR or generate 72.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Tigo Energy
Performance |
| Timeline |
| NETGEAR |
| Tigo Energy |
NETGEAR and Tigo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Tigo Energy
The main advantage of trading using opposite NETGEAR and Tigo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Tigo 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 Tigo Energy will offset losses from the drop in Tigo Energy's long position.| NETGEAR vs. Hewlett Packard Enterprise | NETGEAR vs. Juniper Networks | NETGEAR vs. Ciena Corp | NETGEAR vs. Cisco Systems |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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