Correlation Between Super Micro and NetApp
Can any of the company-specific risk be diversified away by investing in both Super Micro and NetApp 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 Super Micro and NetApp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Micro Computer and NetApp Inc, you can compare the effects of market volatilities on Super Micro and NetApp 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 Super Micro with a short position of NetApp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Micro and NetApp.
Diversification Opportunities for Super Micro and NetApp
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Super and NetApp is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Super Micro Computer and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and Super Micro 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 Super Micro Computer are associated (or correlated) with NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Super Micro i.e., Super Micro and NetApp go up and down completely randomly.
Pair Corralation between Super Micro and NetApp
Given the investment horizon of 90 days Super Micro Computer is expected to generate 2.88 times more return on investment than NetApp. However, Super Micro is 2.88 times more volatile than NetApp Inc. It trades about 0.06 of its potential returns per unit of risk. NetApp Inc is currently generating about 0.15 per unit of risk. If you would invest 3,261 in Super Micro Computer on November 9, 2024 and sell it today you would earn a total of 123.00 from holding Super Micro Computer or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Super Micro Computer vs. NetApp Inc
Performance |
| Timeline |
| Super Micro Computer |
| NetApp Inc |
Super Micro and NetApp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Micro and NetApp
The main advantage of trading using opposite Super Micro and NetApp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Micro position performs unexpectedly, NetApp 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 NetApp will offset losses from the drop in NetApp's long position.| Super Micro vs. D Wave Quantum | Super Micro vs. Rigetti Computing | Super Micro vs. Cricut Inc | Super Micro vs. Quantum Computing |
| NetApp vs. Great Western Minerals | NetApp vs. Enterprise Bancorp | NetApp vs. T Rowe Price | NetApp vs. Aviat Networks |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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