Correlation Between NETGEAR and MACOM Technology

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

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

Diversification Opportunities for NETGEAR and MACOM Technology

-0.36

Correlation Coefficient

NETGEAR  MACOM Technology

Very good diversification

The 3 months correlation between NETGEAR and MACOM is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and NETGEAR 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 NETGEAR are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of NETGEAR i.e., NETGEAR and MACOM Technology go up and down completely randomly.

Pair Corralation between NETGEAR and MACOM Technology

Given the investment horizon of 90 days NETGEAR is expected to under-perform the MACOM Technology. In addition to that, NETGEAR is 1.25 times more volatile than MACOM Technology Solutions. It trades about -0.1 of its total potential returns per unit of risk. MACOM Technology Solutions is currently generating about -0.01 per unit of volatility. If you would invest  12,325  in MACOM Technology Solutions on May 13, 2025 and sell it today you would lose (231.00) from holding MACOM Technology Solutions or give up 1.87% of portfolio value over 90 days.

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

NETGEAR  vs.  MACOM Technology Solutions

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.

MACOM Technology Sol

Risk-Adjusted Performance

Weakest

Over the last 90 days MACOM Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MACOM Technology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NETGEAR and MACOM Technology

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

The idea behind NETGEAR and MACOM Technology Solutions 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.