Correlation Between Lifestore Financial and NETGEAR

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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

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Lifestore and NETGEAR is 0.6. 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 5.05 times less return on investment than NETGEAR. But when comparing it to its historical volatility, Lifestore Financial Group is 1.01 times less risky than NETGEAR. It trades about 0.01 of its potential returns per unit of risk. NETGEAR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,880  in NETGEAR on September 6, 2024 and sell it today you would earn a total of  652.00  from holding NETGEAR or generate 34.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy86.67%
ValuesDaily Returns

Lifestore Financial Group  vs.  NETGEAR

 Performance 
       Timeline  
Lifestore Financial 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price disturbance, may contribute to mid-run losses for the stockholders.
NETGEAR 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in NETGEAR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, NETGEAR reported solid returns over the last few months and may actually be approaching a breakup point.

Lifestore Financial and NETGEAR Volatility Contrast

   Predicted Return Density   
       Returns  

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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