Correlation Between Advanced Micro and NetApp

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

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

Diversification Opportunities for Advanced Micro and NetApp

0.65

Correlation Coefficient

Advanced Micro  NetApp

Poor diversification

The 3 months correlation between Advanced and NetApp is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and NetApp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetApp Inc and Advanced Micro 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 Advanced Micro Devices are associated (or correlated) with NetApp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetApp Inc has no effect on the direction of Advanced Micro i.e., Advanced Micro and NetApp go up and down completely randomly.

Pair Corralation between Advanced Micro and NetApp

Considering the 90-day investment horizon Advanced Micro Devices is expected to generate 1.38 times more return on investment than NetApp. However, Advanced Micro is 1.38 times more volatile than NetApp Inc. It trades about 0.35 of its potential returns per unit of risk. NetApp Inc is currently generating about 0.32 per unit of risk. If you would invest  9,447  in Advanced Micro Devices on February 23, 2025 and sell it today you would earn a total of  1,624  from holding Advanced Micro Devices or generate 17.19% return on investment over 90 days.

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

Advanced Micro Devices  vs.  NetApp Inc

Advanced Micro Devices

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Micro Devices are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Advanced Micro may actually be approaching a critical reversion point that can send shares even higher in June 2025.

NetApp Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NetApp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Advanced Micro and NetApp

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

The idea behind Advanced Micro Devices and NetApp Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.