Correlation Between BBB Foods and NETGEAR
Can any of the company-specific risk be diversified away by investing in both BBB Foods 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 BBB Foods and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and NETGEAR, you can compare the effects of market volatilities on BBB Foods 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 BBB Foods with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and NETGEAR.
Diversification Opportunities for BBB Foods and NETGEAR
Very weak diversification
The 3 months correlation between BBB and NETGEAR is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and BBB Foods 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 BBB Foods 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 BBB Foods i.e., BBB Foods and NETGEAR go up and down completely randomly.
Pair Corralation between BBB Foods and NETGEAR
Given the investment horizon of 90 days BBB Foods is expected to generate 0.94 times more return on investment than NETGEAR. However, BBB Foods is 1.06 times less risky than NETGEAR. It trades about 0.09 of its potential returns per unit of risk. NETGEAR is currently generating about 0.09 per unit of risk. If you would invest 1,750 in BBB Foods on September 4, 2024 and sell it today you would earn a total of 1,108 from holding BBB Foods or generate 63.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 83.81% |
| Values | Daily Returns |
BBB Foods vs. NETGEAR
Performance |
| Timeline |
| BBB Foods |
| NETGEAR |
BBB Foods and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBB Foods and NETGEAR
The main advantage of trading using opposite BBB Foods and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods 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.| BBB Foods vs. Nascent Wine | BBB Foods vs. Vodka Brands Corp | BBB Foods vs. Brandywine Realty Trust | BBB Foods vs. SBM Offshore NV |
| NETGEAR vs. Cambium Networks Corp | NETGEAR vs. KVH Industries | NETGEAR vs. Knowles Cor | NETGEAR vs. Ituran Location and |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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