Correlation Between NetApp and Harmonic

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

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

Diversification Opportunities for NetApp and Harmonic

0.21

Correlation Coefficient

NetApp  Harmonic

Modest diversification

The 3 months correlation between NetApp and Harmonic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NetApp Inc and Harmonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmonic and NetApp 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 NetApp Inc are associated (or correlated) with Harmonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmonic has no effect on the direction of NetApp i.e., NetApp and Harmonic go up and down completely randomly.

Pair Corralation between NetApp and Harmonic

Given the investment horizon of 90 days NetApp Inc is expected to generate 0.63 times more return on investment than Harmonic. However, NetApp Inc is 1.59 times less risky than Harmonic. It trades about 0.1 of its potential returns per unit of risk. Harmonic is currently generating about -0.03 per unit of risk. If you would invest  9,264  in NetApp Inc on May 3, 2025 and sell it today you would earn a total of  846.00  from holding NetApp Inc or generate 9.13% return on investment over 90 days.

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

NetApp Inc  vs.  Harmonic

NetApp Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NetApp Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, NetApp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Harmonic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harmonic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Harmonic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NetApp and Harmonic

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

The idea behind NetApp Inc and Harmonic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.