Correlation Between Plexus Corp and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Plexus Corp and NETGEAR 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 Plexus Corp and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plexus Corp and NETGEAR, you can compare the effects of market volatilities on Plexus Corp and NETGEAR 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 Plexus Corp with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plexus Corp and NETGEAR.
Diversification Opportunities for Plexus Corp and NETGEAR
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Plexus and NETGEAR is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Plexus Corp 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 Plexus Corp are associated (or correlated) with NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of Plexus Corp i.e., Plexus Corp and NETGEAR go up and down completely randomly.
Pair Corralation between Plexus Corp and NETGEAR
Given the investment horizon of 90 days Plexus Corp is expected to generate 1.28 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Plexus Corp is 1.76 times less risky than NETGEAR. It trades about 0.09 of its potential returns per unit of risk. NETGEAR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,430 in NETGEAR on August 26, 2024 and sell it today you would earn a total of 1,000.00 from holding NETGEAR or generate 69.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plexus Corp vs. NETGEAR
Performance |
| Timeline |
| Plexus Corp |
| NETGEAR |
Plexus Corp and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plexus Corp and NETGEAR
The main advantage of trading using opposite Plexus Corp and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plexus Corp position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.| Plexus Corp vs. Celestica | Plexus Corp vs. Benchmark Electronics | Plexus Corp vs. Flex | Plexus Corp vs. Jabil Circuit |
| NETGEAR vs. Ichor Holdings | NETGEAR vs. Fabrinet | NETGEAR vs. Hello Group | NETGEAR vs. Ultra Clean Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |