Correlation Between NETGEAR and Amphenol

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

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

Diversification Opportunities for NETGEAR and Amphenol

-0.56

Correlation Coefficient

NETGEAR  Amphenol

Excellent diversification

The 3 months correlation between NETGEAR and Amphenol is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol and NETGEAR 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 NETGEAR are associated (or correlated) with Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of NETGEAR i.e., NETGEAR and Amphenol go up and down completely randomly.

Pair Corralation between NETGEAR and Amphenol

Given the investment horizon of 90 days NETGEAR is expected to generate 4.0 times less return on investment than Amphenol. In addition to that, NETGEAR is 2.79 times more volatile than Amphenol. It trades about 0.03 of its total potential returns per unit of risk. Amphenol is currently generating about 0.3 per unit of volatility. If you would invest  5,447  in Amphenol on March 14, 2024 and sell it today you would earn a total of  1,422  from holding Amphenol or generate 26.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

NETGEAR  vs.  Amphenol

NETGEAR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, NETGEAR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Amphenol

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Amphenol demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NETGEAR and Amphenol

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

The idea behind NETGEAR and Amphenol 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.