Correlation Between NETGEAR and Nokia Corp

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

By analyzing existing cross correlation between NETGEAR and Nokia Corp ADR, you can compare the effects of market volatilities on NETGEAR and Nokia Corp 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 Nokia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NETGEAR and Nokia Corp.

Diversification Opportunities for NETGEAR and Nokia Corp

0.82

Correlation Coefficient

NETGEAR  Nokia Corp

Very poor diversification

The 3 months correlation between NETGEAR and Nokia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding NETGEAR and Nokia Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia Corp ADR 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 Nokia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia Corp ADR has no effect on the direction of NETGEAR i.e., NETGEAR and Nokia Corp go up and down completely randomly.

Pair Corralation between NETGEAR and Nokia Corp

Given the investment horizon of 90 days NETGEAR is expected to generate 1.56 times more return on investment than Nokia Corp. However, NETGEAR is 1.56 times more volatile than Nokia Corp ADR. It trades about -0.1 of its potential returns per unit of risk. Nokia Corp ADR is currently generating about -0.21 per unit of risk. If you would invest  2,708  in NETGEAR on May 3, 2025 and sell it today you would lose (383.00) from holding NETGEAR or give up 14.14% of portfolio value over 90 days.

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

NETGEAR  vs.  Nokia Corp ADR

NETGEAR

Risk-Adjusted Performance

Very Weak

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.

Nokia Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nokia Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in September 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with NETGEAR and Nokia Corp

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

The idea behind NETGEAR and Nokia Corp ADR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.