Correlation Between Lifestore Financial and NETGEAR

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

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

Diversification Opportunities for Lifestore Financial and NETGEAR

0.59

Correlation Coefficient

Lifestore Financial  NETGEAR

Very weak diversification

The 3 months correlation between Lifestore and NETGEAR is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lifestore Financial Group and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Lifestore Financial 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 Lifestore Financial Group 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 Lifestore Financial i.e., Lifestore Financial and NETGEAR go up and down completely randomly.

Pair Corralation between Lifestore Financial and NETGEAR

Given the investment horizon of 90 days Lifestore Financial is expected to generate 8.7 times less return on investment than NETGEAR. In addition to that, Lifestore Financial is 1.04 times more volatile than NETGEAR. It trades about 0.0 of its total potential returns per unit of risk. NETGEAR is currently generating about 0.04 per unit of volatility. If you would invest  1,727  in NETGEAR on September 11, 2024 and sell it today you would earn a total of  690.00  from holding NETGEAR or generate 39.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.54%
Values	Daily Returns

Lifestore Financial Group  vs.  NETGEAR

Lifestore Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifestore Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Lifestore Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

NETGEAR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifestore Financial and NETGEAR

The main advantage of trading using opposite Lifestore Financial and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestore Financial 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.

The idea behind Lifestore Financial Group and NETGEAR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.