Correlation Between Frequency Electronics and NETGEAR

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

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

Diversification Opportunities for Frequency Electronics and NETGEAR

-0.82

Correlation Coefficient

Frequency Electronics  NETGEAR

Pay attention - limited upside

The 3 months correlation between Frequency and NETGEAR is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR and Frequency Electronics 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 Frequency Electronics 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 Frequency Electronics i.e., Frequency Electronics and NETGEAR go up and down completely randomly.

Pair Corralation between Frequency Electronics and NETGEAR

Given the investment horizon of 90 days Frequency Electronics is expected to generate 1.99 times more return on investment than NETGEAR. However, Frequency Electronics is 1.99 times more volatile than NETGEAR. It trades about 0.19 of its potential returns per unit of risk. NETGEAR is currently generating about -0.1 per unit of risk. If you would invest  1,780  in Frequency Electronics on May 13, 2025 and sell it today you would earn a total of  1,173  from holding Frequency Electronics or generate 65.9% return on investment over 90 days.

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

Frequency Electronics  vs.  NETGEAR

Frequency Electronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Frequency Electronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Frequency Electronics displayed solid returns over the last few months and may actually be approaching a breakup point.

NETGEAR

Risk-Adjusted Performance

Weakest

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

Pair Trading with Frequency Electronics and NETGEAR

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