Correlation Between NetApp and Exeo Entertainment

Can any of the company-specific risk be diversified away by investing in both NetApp and Exeo Entertainment 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 NetApp and Exeo Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NetApp Inc and Exeo Entertainment, you can compare the effects of market volatilities on NetApp and Exeo Entertainment 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 NetApp with a short position of Exeo Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NetApp and Exeo Entertainment.

Diversification Opportunities for NetApp and Exeo Entertainment

0.64

Correlation Coefficient

NetApp  Exeo Entertainment

Poor diversification

The 3 months correlation between NetApp and Exeo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and Exeo Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exeo Entertainment and NetApp 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 NetApp Inc are associated (or correlated) with Exeo Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exeo Entertainment has no effect on the direction of NetApp i.e., NetApp and Exeo Entertainment go up and down completely randomly.

Pair Corralation between NetApp and Exeo Entertainment

If you would invest  0.02  in Exeo Entertainment on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Exeo Entertainment or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

NetApp Inc  vs.  Exeo Entertainment

NetApp Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, NetApp reported solid returns over the last few months and may actually be approaching a breakup point.

Exeo Entertainment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exeo Entertainment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Exeo Entertainment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NetApp and Exeo Entertainment

The main advantage of trading using opposite NetApp and Exeo Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NetApp position performs unexpectedly, Exeo Entertainment 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 Exeo Entertainment will offset losses from the drop in Exeo Entertainment's long position.

The idea behind NetApp Inc and Exeo Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.