Correlation Between NETGEAR and Surgical Care

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

By analyzing existing cross correlation between NETGEAR and Surgical Care Affiliates, you can compare the effects of market volatilities on NETGEAR and Surgical Care 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 Surgical Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Surgical Care.

Diversification Opportunities for NETGEAR and Surgical Care

0.0

Correlation Coefficient

NETGEAR  Surgical Care

Pay attention - limited upside

The 3 months correlation between NETGEAR and Surgical is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Surgical Care Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surgical Care Affiliates 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 Surgical Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surgical Care Affiliates has no effect on the direction of NETGEAR i.e., NETGEAR and Surgical Care go up and down completely randomly.

Pair Corralation between NETGEAR and Surgical Care

If you would invest  1,208  in NETGEAR on March 12, 2024 and sell it today you would earn a total of  201.00  from holding NETGEAR or generate 16.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NETGEAR  vs.  Surgical Care Affiliates

NETGEAR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NETGEAR has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Surgical Care Affiliates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgical Care Affiliates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Surgical Care is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NETGEAR and Surgical Care

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

The idea behind NETGEAR and Surgical Care Affiliates 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.