Correlation Between Valic Company and NETGEAR
Can any of the company-specific risk be diversified away by investing in both Valic Company 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 Valic Company and NETGEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valic Company I and NETGEAR, you can compare the effects of market volatilities on Valic Company 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 Valic Company with a short position of NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valic Company and NETGEAR.
Diversification Opportunities for Valic Company and NETGEAR
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Valic and NETGEAR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Valic Company I and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Valic Company 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 Valic Company I 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 Valic Company i.e., Valic Company and NETGEAR go up and down completely randomly.
Pair Corralation between Valic Company and NETGEAR
Assuming the 90 days horizon Valic Company is expected to generate 19.44 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Valic Company I is 3.99 times less risky than NETGEAR. It trades about 0.09 of its potential returns per unit of risk. NETGEAR is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 2,042 in NETGEAR on August 27, 2024 and sell it today you would earn a total of 389.00 from holding NETGEAR or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valic Company I vs. NETGEAR
Performance |
| Timeline |
| Valic Company I |
| NETGEAR |
Valic Company and NETGEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valic Company and NETGEAR
The main advantage of trading using opposite Valic Company and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valic Company 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.| Valic Company vs. Ab Bond Inflation | Valic Company vs. Arrow Managed Futures | Valic Company vs. Ab Bond Inflation | Valic Company vs. Atac Inflation Rotation |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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