Correlation Between NETGEAR and Valens
Can any of the company-specific risk be diversified away by investing in both NETGEAR and Valens 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 Valens into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NETGEAR and Valens, you can compare the effects of market volatilities on NETGEAR and Valens 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 Valens. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Valens.
Diversification Opportunities for NETGEAR and Valens
Good diversification
The 3 months correlation between NETGEAR and Valens is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of NETGEAR i.e., NETGEAR and Valens go up and down completely randomly.
Pair Corralation between NETGEAR and Valens
Given the investment horizon of 90 days NETGEAR is expected to generate 1.66 times less return on investment than Valens. But when comparing it to its historical volatility, NETGEAR is 2.93 times less risky than Valens. It trades about 0.13 of its potential returns per unit of risk. Valens is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 201.00 in Valens on September 15, 2024 and sell it today you would earn a total of 12.00 from holding Valens or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NETGEAR vs. Valens
Performance |
| Timeline |
| NETGEAR |
| Valens |
NETGEAR and Valens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NETGEAR and Valens
The main advantage of trading using opposite NETGEAR and Valens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NETGEAR position performs unexpectedly, Valens 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 Valens will offset losses from the drop in Valens' long position.| NETGEAR vs. Passage Bio | NETGEAR vs. Black Diamond Therapeutics | NETGEAR vs. Alector | NETGEAR vs. Century Therapeutics |
| Valens vs. ON Semiconductor | Valens vs. Globalfoundries | Valens vs. Wisekey International Holding | Valens vs. Nano Labs |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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