Correlation Between Arlo Technologies and Caesarstone

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

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

Diversification Opportunities for Arlo Technologies and Caesarstone

-0.67

Correlation Coefficient

Arlo Technologies  Caesarstone

Excellent diversification

The 3 months correlation between Arlo and Caesarstone is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arlo Technologies and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone and Arlo Technologies 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 Arlo Technologies are associated (or correlated) with Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Arlo Technologies i.e., Arlo Technologies and Caesarstone go up and down completely randomly.

Pair Corralation between Arlo Technologies and Caesarstone

Given the investment horizon of 90 days Arlo Technologies is expected to generate 0.68 times more return on investment than Caesarstone. However, Arlo Technologies is 1.47 times less risky than Caesarstone. It trades about 0.23 of its potential returns per unit of risk. Caesarstone is currently generating about -0.07 per unit of risk. If you would invest  1,034  in Arlo Technologies on May 6, 2025 and sell it today you would earn a total of  542.00  from holding Arlo Technologies or generate 52.42% return on investment over 90 days.

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

Arlo Technologies  vs.  Caesarstone

Arlo Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arlo Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Arlo Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Caesarstone

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caesarstone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Arlo Technologies and Caesarstone

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

The idea behind Arlo Technologies and Caesarstone 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.